Neo-Liberalism, SME Development and the Role of Business Support Centres in the Transition Economies of Central and Eastern Europe

Abstract

Support for SME development was one of the most important policy interventions initiated by post-Communist governments in Central and Eastern Europe from 1990 onwards. Substantial financial support for this was forthcoming from both the international assistance agencies and western governments. One major result was the formation of networks of Business Support Centres (BSCs). The design of the BSCs was very much informed by the neo-liberal approach to business development which was still in the ascendancy in the late 1980s. As a consequence, the BSC networks were structured to be private sector-led, financially self-sustaining, to involve minimal local government participation, and essentially pressed into focusing upon support initiatives which were consonant with short run market imperatives. With several years of experience now behind them, it is possible to begin to make an assessment of their operations and impact upon the SME development process. Unfortunately, the BSC networks almost everywhere are failing to deliver upon the heady promises of both their domestic and international supporters, and the SME development process is beginning to falter. Crucially, they compare very badly with previous historical episodes of SME development facilitated and co-ordinated by the local state. A new SME discourse is called for which explicitly recognises that a "local developmental state" approach could have a much greater, if not a pivotal, role to play in SME development in the transition economies.