Policy Goals, Reform, and Microenterprise Development

This article is available on pages 78-80 within this compilation document.

This paper explores policy goals, reform, and microenterprise development. It states that most governments appear to have a broad set of policy goals that apply to business in general and are independent of business size. Some governments supplement these general rules with specific policies and programs aimed at helping micro and small enterprises (MSEs) overcome perceived weaknesses. Other governments make occasional exceptions to general rules to provide benefits to MSEs.

However, most governments share a set of common goals that take precedence over specific or targeted goals pertinent to groups within the economy. These include:

• A stable fiscal and monetary policy, resulting in an economy with reasonable interest rates and a reasonable level of inflation;
• A system of financial markets that provides incentives to save and efficient mechanisms to channel savings into investments that raise productive capacity over time.

The document finally concludes that the government should also develop:

• Financial policy that provides for a safe monetary system and for careful supervision of financial intermediaries;
• Competition policy which establishes rules against monopolies and anti- competitive group behaviour that can take place in cartels (groups of businesses acting together to control output and prices);
• A human capital development program that calls for universal basic education and for reasonable access to college education or to advanced vocational training for those with the skills and drive to be successful in these areas;
• An infrastructure development programme that provides the communications network, roads, water and sewer systems, and ports needed to facilitate business transactions;
• A set of policies that establish a favourable climate for the start-up of new businesses and for the growth of businesses;
• Policies that establish and enforce clear rights to property and clear rules relating to the performance of contracts.

[Adapted from the author]