Over the last twenty years, widespread fiscal and political decentralization in Latin America and the Caribbean has not yet resulted in extensive social and economic welfare at the regional level. Decentralization has rarely been accompanied by the necessary capacity development that would allow both private and public regional institutions to implement programs and policies for micro, small and medium enterprises (MSMEs) that enhance incomes at the regional level by fully capitalizing on regional assets and competitive advantages of their territories.
Moreover, MSMEs in decentralized areas face critical constraints on their global competitiveness, such as:
- Low degree of cooperation among enterprises with public and other private sector actors at the regional level, due to high transaction costs
- Insufficient use of local economic assets and competitive advantages, including collective and public goods, due to asymmetries of information
- Limited access to key technologies, management and marketing skills, and other business inputs, due to market imperfections.
The MIF aims to expand the adoption of regional economic development models based on public-private interaction and geared to economic, social, and environmental sustainability. These models seek to increase MSME competitiveness by capitalizing on regional assets and incorporating local added value to the businesses, which are expected to result in an increase in domestic production at the regional level.
The MIF works with MSMEs from a range of economic sectors. However, considering the extensive experience of the MIF in the tourism sector, an emphasis will be placed on the realization of market results to cultural assets, and incorporating MSMEs into the benefits of growing tourism markets.
- Public-private management and governance solutions for high-impact local economic development (LED), including a number of targeted solutions for high-poverty regions.
- Business solutions for MSMEs to increase their internal and external competitiveness in global markets.
- Market incentive models aimed at encouraging active investment of leading private sector firms and other partners in LED programs and policies.
- Up-scaling solutions targeted at second-tier private sector development institutions and/or national authorities, focusing on the institutional needs and model adaptations needed to mainstream high-impact LED models into national MSME development programs and policies.
- For the cultural heritage and tourism sector, the MIF will similarly develop sector-specific solutions targeted to key regional public and private policy stakeholders, tourism MSMEs, tourism investors, and second-tier program up-takers in the tourism sector.
Results and Impact:
- At the territorial level, increased regional income vis-à-vis historical trends
- At the firm level, increased competitiveness of MSMEs measured through a reduction in operational costs, increased sales and/or benefits
- At the individual/household level, increased family income, employment effects, and poverty reduction, whenever applicable.