Entrepreneur: Government and Medium Enterprises Essay

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Abstract
Small and medium enterprises play a vital role in almost countries. Small and medium enterprises are able to not only improve employment rate but also they are sources of innovation. However, compared to large firms, small and medium enterprises are more likely to fail. The reason is that small and medium enterprises many lack collateral or may have poor book-keeping records. They may also have a higher interest rate than the large firms. As a result, government and public policy should facilitate the development of small and medium enterprises. Government needs to encourage foreign enterprises to set up the business in their countries, or build greater foreign owned joint ventures with domestic small and medium enterprises. Public policy and government should promote the innovation of the small and medium enterprises.

Introduction
SMEs is defined as small and medium enterprises. SMEs are said to be responsible for the driver of innovation and competition in economic sectors. Nowadays it is also widely said that SMEs are one of the most important and powerful drivers of growth in the modern global economy. This essay will discuss the roles of small and medium enterprises played in the economy. It will also discuss how the government facilitate the development of small and medium enterprises.
Body
Small and medium enterprises play a vital role in almost countries, especially in developing countries. Economic growth happens not due to broad improvements in technology, productivity and available resources, but according to Schaper & Volery &Weber &Lewis(2011, p14), "because entrepreneurs (a)improve their technology, organization and processes,(b)become more productive and innovative and (c) force other firms out of business. Schaper & Volery &Weber &Lewis(2011) also point out that due to the increasing small and medium enterprises, there are more and more new and better jobs and overall level of productivity rises, and economic well-being increases. According to Dun & Bradstreet data, Birch's(1979) research claims that the small and medium firms created more than 80 per cent of net new jobs in American economy in the period between 1969 and 1976. Small and medium enterprises assistance policies have become a section of industrial policy not only in developed countries, but also in developing countries for several years. For the developed countries, there are three main increasing contribution of small and medium enterprises. Firstly, industrial restructuring leads to downsizing of large enterprises in the 1970s. Secondly, small and medium enterprises lead to privatization and market deregulation during the period between 1980s and 1990s. In recent years, small and medium enterprises contribute to decrease the importance of scale economies, and increase wealth and develop the niche markets. Deakins and Freeal (chater2) point out that small and medium enterprises play a important role in providing jobs in the southern European countries, such as Spain and Italy. For the developing countries, small and medium enterprises have a vital role in alleviating poverty. Small and medium enterprises play a vital role in innovation. According to Schaper & Volery &Weber &Lewis(2011,p12), "the innovations developed by entrepreneurs often increase productivity and improve general living standards".

The main problem faced by small and medium enterprises not only in developed countries but also in developing countries is lack of access to finance. Levitsky (1996) argues that finance has a significant effect on the ability of an enterprise, for example, the growth of the firm, the promotion of its technology, expansion of the markets, improvement of the management capabilities, or survival of the firm. And also, Lattimore et all. (1998) point out that banks always have difficulty in measuring loans to small and medium enterprises due to the lack of detailed and accurate financial
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