Hidden Sources of Growth? Looking at Microenterprises Through the Competitiveness Lens: A Review of Evidence

How does the performance of microenterprises, establishments with up to ten employees, affect the competitiveness and growth of a regional or national economy? Under what conditions does the economic activity in the microenterprise sector become a drag on competitiveness drives? Under what conditions can competitive performance in the sector advance overall productivity gains? How are microenterprises affected by changes in the enabling environment that determine a country’s competitiveness ranking?

This microREPORT reviews and summarizes theoretical arguments and empirical evidence on these issues, looking at the micro and small enterprise sector through the competitiveness lens, focusing on innovative capacity. Gains in (total factor) productivity drive economic growth, and the essence of competitiveness is the ability to sustain productivity increases through continuous innovation.