In both developed and developing economies, small and medium enterprises (SMEs) are considered crucial to fostering economic and social development and their growth is supported with a
wide range of policies as outlined above.
The failure rate of small new businesses in their initial years is high in both developed and developing economies. In part this reflects the competitive environment within which the businesses
are launched and also the effectiveness of the specific business idea. It is also a consequence of
the lack of experience of the entrepreneur who is launching the business and deficiencies in the
environment (i.e. shortage of capital, legal difficulties, lack of information, etc). A wide range of
initiatives are supported by governments to try and reduce business failure rates through addressing problems in the environment (i.e. special loan funds, removing legal obstacles, reducing government administrative procedures and speeding up their operation) and by assisting new entrepreneurs to tackle their lack of experience (training programs, advisory and support services,