Project Title

Study on the effects of formalization programs on the productivity and long-term survival of micro and small enterprises in APEC economies 

Project Year

2023   

Project Number

SMEWG_205_2023A 

Project Session

Session 2   

Project Type

Standard 

Project Status

Project in Implementation   
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Project No.

SMEWG_205_2023A 

Project Title

Study on the effects of formalization programs on the productivity and long-term survival of micro and small enterprises in APEC economies 

Project Status

Project in Implementation 

Publication (if any)

 

Fund Account

APEC Support Fund 

Sub-fund

ASF: General Fund 

Project Year

2023 

Project Session

Session 2 

APEC Funding

40,240 

Co-funding Amount

35,880 

Total Project Value

76,120 

Sponsoring Forum

Small and Medium Enterprises Working Group (SMEWG) 

Topics

Small and Medium Enterprises 

Committee

SOM Steering Committee on Economic and Technical Cooperation (SCE) 

Other Fora Involved

 

Other Non-APEC Stakeholders Involved

 

Proposing Economy(ies)

Peru 

Co-Sponsoring Economies

Canada; Chile 

Expected Start Date

01/03/2024 

Expected Completion Date

30/06/2025 

Project Proponent Name 1

Lourdes Alvarez Chavez 

Job Title 1

Director General of Impact Evaluation and Economic Studies 

Organization 1

Ministry of Production of Peru 

Postal Address 1

Not Applicable 

Telephone 1

+51 1 6162222 ext. 3300 

Fax 1

Not Applicable 

Email 1

lalvarezd@produce.gob.pe 

Project Proponent Name 2

Harriet Jasmine Gomez Moncad 

Job Title 2

Director of Impact Evaluation 

Organization 2

Ministry of Production 

Postal Address 2

Not Applicable 

Telephone 2

+51 1 940143792 

Fax 2

Not Applicable 

Email 2

hgomezm@produce.gob.pe 

Declaration

Lourdes Alvarez Chavez 

Project Summary

Business informality is a priority issue which negatively affects the government’s ability to finance public services. To face this situation, emerging economies such as Peru have formalization programs like “Programa Nacional Tu Empresa”. This program offers training services on formalization and taxes issues to the micro and small enterprises (MSEs), led by women and people with disabilities, to formalize, increase their sales and survive in the long term in the labor market. The objective of this project is to understand and analyze how these formalization programs have contributed to the productivity growth and survival of small and medium enterprises in APEC economies. This project will be based in Lima (Peru) and will have the participation of various stakeholders (policy makers and researchers) to organize and international symposium and show the effective policies against to informality.

Relevance

Benefits to Region

Micro and small enterprises (MSEs) represent over 97% of all commercial businesses and employ more than 80% of the workforce in APEC economies (World Trade Organization, 2023). However, their contribution to economic growth ranges between 40% and 60% in most emerging economies. Additionally, informality negatively impacts domestic tax revenues and hinders business growth. According to the Economic Observatory of Peru, informality adversely affects economic growth, worker productivity, and social welfare, as it hampers access to credit and, by reducing tax collection, leads to lower coverage and quality in the provision of public goods and services (BBVA, 2017).

Moreover, there are factors that limit the entrepreneur's decision to opt for formal business registration. For example, bureaucratic barriers, excessive tax and labor regimes, deficient technological and productive structures of small production units, low levels of training and technical assistance in SMEs. Therefore, this project aims to understand and analyze how these formalization programs have contributed to the productivity growth and survival of small and medium enterprises in APEC economies. This research will help identify effective policies that promote the formalization of MSEs and have generated positive results in the productivity and survival rates of these companies. These best practices can be replicated in other APEC economies to implement and/or improve support programs for MSEs and thus foster their development.

Eligibility and Fund Priorities

The project seeks to develop capacities among the APEC member economies, among the priority issues is Developing and strengthening the dynamism of Small and Medium


Enterprises (SMEs), so that they have tools that allow them to be efficient and effective in the face of changes in the market structure; which belongs to the APEC Support Fund

– General Fund.

Capacity Building

The result of this project will generate evidence of the effectiveness of formalization support programs that can be replicated in other economies with similar characteristics within APEC. According to specialized literature, this directly impacts the productivity of businesses.


Objectives

The aim of this project is to evaluate the impact of business formalization programs on the productivity growth and survival of micro and small enterprises (MSEs) in APEC economies, through mixed methodologies (quantitative and qualitative). The results will generate evidence of the effectiveness of formalization support programs that can be replicated in other economies with similar characteristics within APEC.

We aim to contribute valuable insights to the APEC community, enabling policymakers and stakeholders to make informed decisions and implement effective measures to support the growth and formalization of MSE, thereby promoting inclusive economic development in the region.

Alignment

APEC

The proposed project aligns with the Inclusion priority, "Ensuring an equitable and inclusive future for all" of APEC 2023. To achieve an equitable and sustainable future, the project aims to understand and analyze how these formalization programs have contributed to the growth of productivity and survival of small and medium enterprises in APEC economies, with an emphasis on the role played by women entrepreneurs who have accessed support programs in formalization. Likewise, the project aims to help identify the public policies in APEC economies that have contributed to improving labor productivity through the formalization of SMEs.

Forum

This project is aligned with the progress of the APEC Putrajaya Vision 2040, which comprises three economic engines: i) trade and investment, ii) innovation and digitalization, and iii) strong, balanced, secure, sustainable, and inclusive growth. In 2021, the 21 APEC member economies developed the Aotearoa Action Plan, a roadmap for implementing the Putrajaya Vision 2040.


TILF/ASF Justification

Not Applicable.

Beneficiaries and Outputs

Outputs

1)
Research Report

The report will contain the results of research conducted in five APEC economies, two developed economies, and three developing economies. Initially, the plan is to assess the economies of Chile and Canada, co- sponsors of the project, and Peru, the project’s main sponsor. Additionally, the intention is to include two more economies, with which we are currently in the process of negotiating their inclusion in the study, through the cooperation office of Peru's Ministry of Production. Specifically, the following areas within companies will be assessed: 1) SME performance after formalization (revenues, workforce hiring), 2) Productivity level, 3) Survival rate, 4) Access to new markets, and 5) Positive and negative outcomes.

The research work will include a review of the economic literature (academic publications and reports from international organizations). A mixed-methods approach will be used, combining online surveys (quantitative data) and in- depth interviews (qualitative data). The target audience for the research is composed of SMEs from the selected APEC economies, which will be chosen among those affiliated with national chambers of commerce, associations, business guilds, etc. These entities will be contacted by the consulting team through information provided by the respective government agencies in each country. If cooperation with government entities from the selected economies is not possible, contacts will be made with private institutions such as business associations from each country, and information sources provided by specialized business database agencies will be used.

The research will use a non-probabilistic sample of between 50 and 70 companies for each economy, focusing on formal private SMEs with more than 3.5 years of experience in the market (time since operations began). Surveys will be conducted through an online form, and while there is a risk of a low response rate in online surveys, a replacement sample of 20% of the total is proposed. Additionally, complementary in-depth interviews (focus groups) will be considered to supplement the initial results.

Furthermore, databases and company records located in the selected economies will be reviewed for the study. Specifically, secondary sources such as tax records from the governments of the selected economies and databases of registered companies benefiting from SME formalization programs in those economies will be used. Information about women-led SMEs will be collected, and special attention will be given to the results obtained from them.

The report will contain conclusions and policy recommendations for the APEC economies. The document’s structure will be as follows: economic context, literature review, analysis of survey and interview results, conclusions, and policy recommendations. The report's results will help identify effective policies that promote SME formalization and have generated positive outcomes in productivity and survival rates. These best practices could be replicated in other APEC economies to implement and/or improve support programs for SMEs, thereby fostering their development. It's considered important that the report includes at least three policy recommendations to promote SME formalization in APEC economies. The report will be about 50 to 70 pages in length. Before the webinar, a preliminary version of the report will be sent to the speakers, sharing the main research results. Additionally, an executive summary with preliminary results obtained after data collection will be sent to the participants. The research report will be reviewed and finalized after the webinar to include the experts' feedback and recommendations.

The report will provide crucial information about the effectiveness of these policies. This would help understand which aspects of the programs worked and which need adjustments or improvements. Additionally, the research will serve as a guide for future policies and help identify the successes and failures of support programs, allowing governments to design more effective strategies to support entrepreneurs, especially in developing economies.

Analyzing the impact of support programs could foster a more robust and sustainable economic environment for SMEs. Ultimately, this research could help identify which aspects of the programs worked best and where the allocation of resources could be improved. This would optimize the use of public and private funds in similar situations in the future in APEC economies.

2) Webinar

The webinar is scheduled for March 2025 and will be entirely virtual due to cost-effectiveness considerations related to the high organizational and transportation costs associated with an in-person meeting in Lima, Peru. This three-hour virtual event will be held on the Zoom platform, with Peru presenting the research findings on the effects of formalization programs on the productivity and long-term survival of SMEs. The presentation will include preliminary findings and policy recommendations for the 21 APEC economies.

The proposed agenda is as follows:

Time/Description

First hour: Presentation of study results, conclusions, and preliminary proposals.

Second hour: Perspectives and comments from experts representing three APEC economies (one developed economy and two developing economies). Third hour: Q&A from attendees and a virtual survey to evaluate whether the workshop has adequately addressed issues related to the main topic. It should be noted that the research report will be sent in advance to experts from the three APEC economies for their participation in the virtual event. Contributions from experts and participants in the event may be included in the final publication of the research (publicly accessible). The research report will be sent in advance to experts from the three APEC economies for their contributions to the virtual event.

Outcomes

1) Raise awareness among policymakers in APEC economies about the importance and effectiveness of SME formalization policies (programs and projects) that generate positive outcomes in their survival and productivity through disseminating research findings based on experiences in APEC economies

2) Enhance knowledge and understanding of APEC members' experiences in supporting SMEs through the exchange of ideas among APEC members. Recording opinions and insights from experts sharing their knowledge during the webinar will improve the collective understanding of APEC members. This, in turn, will contribute to the refinement and effective implementation of programs for SMEs.

3) Increase awareness of best practices in supporting SME formalization in APEC economies. Additionally, our goal is to enable policymakers to identify effective policies that support SMEs. These successful policies will serve as models and provide insights for APEC policymakers to replicate and apply in the future.

Beneficiaries

Direct beneficiaries: Representatives from the finance and/or industry departments, secretariats, ministries (or their equivalents) of the twenty-one APEC economies attending the virtual event (governmental members from each economy) and their respective representatives from the APEC SME Working Group (SMEWG) forum.

Additionally, it is considered important to have the participation of other relevant forums such as the Policy Partnership on Women and the Economy (PPWE) and members of the APEC Business Advisory Council (ABAC), if deemed appropriate. At this time, invitations to members of external particular organizations are not being considered. 

The attendee profile includes policymakers (directors, general managers, etc.) and professional and specialized technical personnel (specialists, analysts, senior staff, etc.) in public policy and policies supporting SMEs and/or government financial support programs from the finance and/or industry departments (or their equivalents) of the APEC economies that are members of the SMEWG forum. 

Indirect beneficiaries: Members of the departments, secretariats, ministries (or their equivalents) of trade, planning, and/or social programs (qualified professional staff and decision-makers), as well as representatives from private sector business chambers in various sectors of the APEC economies (managers, heads, etc.). In the first case, officials will benefit from learning about SME support policies that can complement the support and/or promotion policies they implement; in the second case, representatives of business associations can request their governments to implement an SME support system upon learning the study results.

On the other hand, it is planned that the research report will be published as an official APEC publication and will be accessible to governmental entities of the twenty-one APEC economies through the APEC SME Working Group (SMEWG) forum. In this way, there is an intention to disseminate the research through the digital platforms available on the APEC SMEWG forum (https://www.apec.org/publications/). This will take place once the research report is published, in the second quarter of 2025.

Dissemination

The research report will be published as an official APEC publication and will be accessible to stakeholders from the twenty-one APEC economies through the APEC SME Working Group (SMEWG) forum. Dissemination will be carried out through digital media, including APEC's social media platforms, and will be posted in the publications section of the official APEC website (https://www.apec.org/publications/), attached to the APEC SMEWG forum. The report will be prepared in strict compliance with APEC Publication Guidelines, using the APEC Publication Toolkit as a guide for drafting and presenting APEC reports, and adhering to APEC logo guidelines and naming standards. Additionally, it is deemed relevant to disseminate the study through distribution channels such as the institutional websites of APEC governments and press releases in accordance with APEC social media guidelines.

Regarding the virtual event, official invitations will be sent to representatives from the finance and/or industry departments, secretariats, ministries (or their equivalents) of the governments of the twenty-one APEC economies that are members of the SMEWG forum, as well as to members and representatives of the SMEWG forum. Additionally, it is considered important to have the participation of other relevant forums such as the Policy Partnership on Women and the Economy (PPWE) and members of the APEC Business Advisory Council (ABAC), if deemed appropriate. At this time, invitations to members of external particular organizations are not being considered.

Gender

Please see Project Proposal in Supporting Documents folder.

Work Plan

Please see Project Proposal in Supporting Documents folder.

Risks

Please see Project Proposal in Supporting Documents folder.

Monitoring and Evaluation

Please see Project Proposal in Supporting Documents folder.

Linkages

The project aligns with strategic development areas of other forums such as the APEC Business Advisory Council (ABAC) and the Finance and Economics Working Group (FEWG), both of which will be invited to participate in the event.

Sustainability

The main achievement of the project will be the assimilation of valuable ideas by policymakers and decision-makers from the 21 APEC economies, who will be able to replicate effective policies to promote SME formalization. In this regard, in the long term, officials from state agencies of the 21 APEC economies will be able to enhance their public policies fostering SME formalization, aiming to generate positive outcomes in their survival and productivity levels, replicating successful experiences and identifying opportunities for improvement in the policies they are currently implementing. This is particularly relevant for developing economies within APEC.

Project Overseers

PhD in Economics from the University of Geneva, Switzerland. She holds a Master's degree in Applied Econometrics from the University of Paris I and a Master's degree in Applied Economic Research from the University of Bordeaux. She has served as Senior Consultant in the Economics Division of the United Nations Environment Program- UNEP based in Geneva, Switzerland. She has been Senior Consultant on modeling and productivity issues at the International Labor Organization (ILO) in Paris. She has worked as Innovation Project Manager at IZP Technologies Group in Beijing, China. She has held the position of Coordinator of Impact Assessments at the Institute for Research in Theoretical and Applied Economics GREThA in Bordeaux, France.

In the Public Sector, she has been Consultant in different institutions, Presidency of the Council of Ministers (PCM), Ministry of Environment (MINAM), Environmental Evaluation and Control Agency (OEFA), Supervisory Body of State Procurement (OSCE), Alliance for a Green Economy-PAGE in the Ministry of Labor and Employment Promotion (MTPE), among others. Currently, she is the General Director of Impact Evaluation and Economic Studies at the Ministry of Production.

Cost Efficiency

Not Applicable.

Drawdown Timetable

Not Applicable.

Direct Labour

Please see Project Proposal in Supporting Documents folder.

Waivers

Not Applicable.

Are there any supporting document attached?

No 
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Created at 21/02/2024 22:59  by Dwi Prameswari 
Last modified at 22/05/2024 11:07  by Lucy Phua 
Version HistoryVersion History

Project No.

Project Title

Project Status

Publication (if any)

Fund Account

Sub-fund

Project Year

Project Session

APEC Funding

Co-funding Amount

Total Project Value

Sponsoring Forum

Topics

Committee

Other Fora Involved

Other Non-APEC Stakeholders Involved

Proposing Economy(ies)

Co-Sponsoring Economies

Expected Start Date

Expected Completion Date

Project Proponent Name 1

Job Title 1

Organization 1

Postal Address 1

Telephone 1

Fax 1

Email 1

Project Proponent Name 2

Job Title 2

Organization 2

Postal Address 2

Telephone 2

Fax 2

Email 2

Declaration

Project Summary

Relevance

Objectives

Alignment

TILF/ASF Justification

Beneficiaries and Outputs

Dissemination

Gender

Work Plan

Risks

Monitoring and Evaluation

Linkages

Sustainability

Project Overseers

Cost Efficiency

Drawdown Timetable

Direct Labour

Waivers

Are there any supporting document attached?

hdFldAdmin

Project Number

Previous Fora

Secretariat Comments

Reprogramming Notes

Consolidated QAF

Endorsement By Fora

PD Sign Off

Batch

Forum Priority

Committee Ranking Category

Committee Priority

PDM Priority

Priority Within Funding Category

Monitoring Report Received

Completion Report Received

PMU Field 1

PMU Field 2

PMU Field 3

On Behalf Of

Proposal Status

Originating Sub-Forum

Approval Status
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