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SME Policy Index
Western Balkans
and Turkey 2019
ASSESSING THE IMPLEMENTATION OF THE SMALL
BUSINESS ACT FOR EUROPE
SME Policy Index:
Western Balkans
and Turkey
2019
ASSESSING THE IMPLEMENTATION

OF THE SMALL BUSINESS ACT
FOR EUROPE
This work is published under the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of the OECD member countries, or the official views of the European Bank for
Reconstruction and Development, the European Training Foundation and the
European Union.
This document, as well as any data and any map included herein, are without prejudice
to the status of or sovereignty over any territory, to the delimitation of international
frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as:

OECD/ETF/EU/EBRD (2019), SME Policy Index: Western Balkans and Turkey 2019: Assessing the
Implementation of the Small Business Act for Europe, SME Policy Index, OECD Publishing, Paris.
https://doi.org/10.1787/g2g9fa9a-en
ISBN 978-92-64-31286-9 (print)

ISBN 978-92-64-31295-1 (pdf)
SME Policy Index

ISSN 2413-6875 (print)
ISSN 2413-6883 (online)
European Union
Catalogue number: ET-04-19-127-EN-C (print)
Catalogue number: ET-04-19-127-EN-N (pdf)
ISBN 978-92-79-99991-8 (print)
ISBN 978-92-79-99992-5 (pdf)
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in
the West Bank under the terms of international law.
Photo credits: Cover © Designed by Caroline Lee, Spielplatz 13.
Corrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.

© OECD, ETF, European Union and EBRD 2019
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(CFC) at contact@cfcopies.com.
FOREWORD 3
Foreword
Small and medium-sized enterprises (SMEs) and entrepreneurs are key drivers of
inclusive and sustainable growth, job creation, skills development and innovation. As
such, creating thriving environments for SMEs is at the forefront of the policy-making
agenda in OECD countries and beyond.
The Western Balkans and Turkey are no exception. Together, their SMEs make up 99%
of all firms, generate around 65% of total business sector value added and account for
73% of total business sector employment. Acknowledging these crucial contributions of
SMEs to their economies, governments across the region have set up dedicated agencies
and developed strategies to foster SMEs’ competitiveness. However, more remains to be
done to tackle the challenges facing SMEs and entrepreneurs in the region, ranging from
access to finance to participation in international trade. In light of its advancing economic
integration with the European Union (EU), addressing these challenges is both timely and
crucial for the economic development of the region.
The SME Policy Index: Western Balkans and Turkey 2019 - Assessing the
Implementation of the Small Business Act for Europe provides an important tool to help
policy makers design and implement policies to support the creation, innovation and
growth of SMEs based on good practices in OECD and EU countries. It is the fifth
edition of this series, following assessments in 2007, 2009, 2012 and 2016. This report
provides a comprehensive overview of the implementation status of the ten Small
Business Act for Europe (SBA) principles, and monitors progress made since 2016. In
addition, it identifies the remaining challenges affecting SMEs in these EU pre-accession
economies and makes recommendations to overcome them. It also provides guidance on
how they can meet EU requirements and converge towards global best policy practices.
The assessment shows that in recent years many new public initiatives have surfaced, in
particular those providing technical and financial support to SMEs. Increasingly,
entrepreneurs can turn to public institutions for advice and support to help them start and
grow a business. At the same time, administrative barriers to starting and sustaining a
small enterprise have been further reduced.
While these developments are welcomed, some persistent deficiencies remain. Regulatory
conditions continue to challenge the business environment and programmes are often
insufficiently funded and off-target. Policies need to be better aligned with SMEs’ needs
in order to help them improve productivity, scale up and become better integrated into
global markets. This requires a business-led approach to designing policies and
programmes that identify and consider SMEs’ needs from the start. Existing monitoring
practices need to be accompanied by regular evaluations of programme impact, in order
to favour the optimal use of public resources and advance evidence-based policy making.
This report is the result of a collaborative effort by the Organisation for Economic Co-
operation and Development (OECD), the European Bank for Reconstruction and
Development (EBRD) and the European Training Foundation (ETF), with the support of
SME POLICY INDEX: WESTERN BALKANS AND TURKEY 2019 © OECD/ETF/EU/EBRD 2019
4  FOREWORD
the European Commission and the governments involved. The views of a wide range of
stakeholders, including SMEs themselves, were sought and are reflected throughout the
publication.
We commend the efforts of the EU pre-accession economies to foster private sector
development through strengthened SME policies, and look forward to our continued
partnership delivering better opportunities for companies and citizens across the region.
Angel Gurría Johannes Hahn Suma Chakrabarti Cesare Onestini

Secretary General EU Commissioner for President Director
OECD European Neighbourhood European Bank European Training
Policy and Enlargement for Reconstruction Fondation
Negotiations and Development
SME POLICY INDEX: WESTERN BALKANS AND TURKEY 2019© OECD/ETF/EU/EBRD 2019
ACKNOWLEDGEMENTS 5
Acknowledgements
The SME Policy Index: Western Balkans and Turkey 2019 - Assessing the
Implementation of the Small Business Act is the outcome of work conducted by the
OECD and seven pre-EU accession economies (Albania, Bosnia and Herzegovina,
Kosovo,* Montenegro, the Republic of North Macedonia, Serbia, and Turkey) in
co-operation with the European Bank for Reconstruction and Development (EBRD) and
the European Training Foundation (ETF). The work was co-ordinated by the OECD’s
South East Europe Division.
The assessment was conducted under the guidance of Andreas Schaal, Director of the
OECD Global Relations Secretariat, and Marzena Kisielewska, Head of the OECD South
East Europe Division.
The work was led by Umur Gökçe, OECD South East Europe Division. The project
benefitted from the early guidance of Clément Brenot, OECD South East Europe
Division. It further profited from inputs by William Tompson, Head of the Eurasia
Division, OECD, as lead reviewer of the publication.
This report was made possible thanks to the contributions of the National Small Business
Act (SBA) co-ordinators who supported the data-gathering and verification process. Our
special thanks also go to 600 government officials and other stakeholders who have been
actively involved across the region, whose support and dedication have made the
development of this publication possible. We would like especially to acknowledge the
contributions of the following individuals and organisations:
Albania: Majlinda Hafizi (SBA Co-ordinator of Albania), Gavril Lasku, Eralda Shtylla
(Ministry of Finance and Economy), Evisi Kopliku (Ministry of Tourism and
Environment), Valmira Bebri and Etugert Llazi (Institute of Statistics).
Bosnia and Herzegovina: Dragan Milović (SBA Co-ordinator of Bosnia and
Herzegovina), Adis Fajić (Co-ordinator of the Federation of Bosnia and Herzegovina),
Zoran Savić (Co-ordinator of the Republika Srpska), Milka Latinčić (Ministry of
Industry, Energy and Mining of the Republika Srpska), Amra Abadžić (Sub-Department
for Economic Development of Brčko District), Miljan Popić (Agency of Statistics of
Bosnia and Herzegovina).
North Macedonia: Blerim Zllatku (SBA Co-ordinator of North Macedonia) and Branko
Hinić (State Statistical Office).
*
This designation is without prejudice to positions on status, and is in line with United Nations
Security Council Resolution 1244/99 and the Advisory Opinion of the International Court of
Justice on Kosovo’s declaration of independence.
6  ACKNOWLEDGEMENTS
Kosovo: Nol Buzhala (SBA Co-ordinator of Kosovo), Kreshnik Thaqi (Ministry of Trade
and Industry), Avni Kastrati (Kosovo Agency of Statistics), Besian Mustafa (former SBA
Co-ordinator of Kosovo).
Montenegro: Radosav Babić (SBA Co-ordinator of Montenegro), Sanja Varajić, Anđela
Gajević (Ministry of Economy of Montenegro), Marijana Popović-Rončević (Statistical
Office of Montenegro), Aleksandar Pavićević (former SBA Co-ordinator of Montenegro).
Serbia: Katarina Obradović Jovanović (SBA Co-ordinator of Serbia), Jelena Matović
(Ministry of Economy), Jelena Šćekić (Ministry of Economy), Nenad Radošević
(Statistical Office of Serbia).
Turkey: Necati Günaydın (SBA Co-ordinator of Turkey) Neriman Pınar Işın, Beyza
Kuriş, Abdullah Aktepe (KOSGEB), Ş. Şenol Bozdağ, Murat Yılmaz (Turkish Statistical
Institute).
The principal authors of the SME Policy Index: Western Balkans and Turkey 2019 are
shown in the table below:
Executive summary Umur Gökçe
Economic context and the role of
SMEs in the Western Balkans and Martin Kohtze
Turkey
Policy framework and assessment
Irhad Puce
process
Chapter 1: Entrepreneurial
learning and women’s Anthony Gribben, Olena Bekh (ETF)
entrepreneurship (Dimension 1)
Chapter 2: Bankruptcy and second
Ali Fuad Turgut with expert guidance from Krassin Dimitrov (external consultant)
chance for SMEs (Dimension 2)
Chapter 3: Institutional and
regulatory framework for SME Jovana Pavlović
policy making (Dimension 3)
Chapter 4: Operational
environment for SMEs (Dimension Ali Fuad Turgut, Piotr Dudek
4)
Chapter 5. Support services for
Martin Kohtze
SMEs (Dimension 5a)
Chapter 6: Public procurement Erika Bozzay in co-operation with Darius Piasta, Marian Lemke and Piotr-Nils
(Dimension 5b) Gorecki (OECD Sigma)
Chapter 7. Access to finance for
Christian Cronauer, Svenja Petersen, Simone Zeh Atanasovski (EBRD)
SMEs (Dimension 6)
Chapter 8. Standards and Umur Gökçe and Irhad Puce in co-operation with Knut Blind, Mona Mirtsch and
technical regulations (Dimension 7) Claudia Koch (Technische Universität Berlin)
Chapter 9. Enterprise skills
Pirita Vuorinen (ETF)
(Dimension 8a)
Chapter 10. Innovation policy for
Marko Atanasovski (external consultant), Umur Gökçe
SMEs (Dimension 8b)
Chapter 11. SMEs in a green
Jovana Pavlović
economy (Dimension 9)
Chapter 12. Internationalisation of
Martin Kohtze, Damaris Bangean
SMEs (Dimension 10)
SBA profiles The general parts of the profiles were drafted by the OECD SEE team, while the
dimension-specific parts were drafted by the same authors as above, with the
following exceptions. For Dimension 1 and Dimension 8a, Kristien Van den Eynde
(ETF) was also one of the authors, while Dimension 8b was drafted by Katarina
Urošević (external consultant).
Annexes Irhad Puce
Note: All authors are from the OECD South East Europe Division, unless specified otherwise.
ACKNOWLEDGEMENTS 7
The report was reviewed by and benefitted from further inputs provided by the OECD
Centre for Tax Policy and Administration; the OECD Environment Directorate; the
OECD Directorate for Science, Technology and Innovation; and OECD SIGMA (Support
for Improvement in Governance and Management). At the EBRD, inputs were provided
by the SME Finance and Development Group; the Economics Policy and Governance
Department; the Office of the General Counsel, Local Currency and Capital Markets; and
the country teams in the Western Balkans and Turkey.
The publication was also reviewed and supported by the European Commission’s
Directorate-General Internal Market, Industry, Entrepreneurship and SMEs (DG GROW);
Directorate-General Neighbourhood and Enlargement Negotiations (DG NEAR); and the
EU Delegations in the Western Balkans and Turkey. In particular, the OECD team are
grateful for the contributions from Youssef Tadros (DG NEAR), Christos Kyriatzis,
Laura Mc Grath, Francesca Porcelli, Lukrecija Kireta, Argyro Karachaliou, Thomas
Heinemeier, Claudia Martinez Felix, Eva Maria Revilla Penaranda, Simone Baldassari,
Artur Romanek (DG GROW).
The independent assessments were conducted with the support of local consultants: Juela
Shano (Albania), Edin Jahić (Bosnia and Herzegovina), Valmira Rexhëbeqaj (Kosovo),
Dragana Radević (Montenegro), Igor Nikoloski and Roman Papadimitrov (North
Macedonia), Katarina Urošević (Serbia), and Şirin Elçi and Özge Eyigün (Turkey).
The following people also contributed significantly to the success of the project: Patrik
Pruzinsky, Przemysław Kowalski, Alex Silvestri, Marietta Martin and Xhuliano Dule.
The report was prepared for publication by Camille Hewitt and Renée Chantrill, with the
strategic support of Vanessa Berry-Chatelain (OECD Global Relations Secretariat) and
Anne-Lise Prigent (OECD Public Affairs and Communications Directorate). It was edited
and proofread by Fiona Hinchcliffe, Sally Hinchcliffe and Clare Rogers.
This report has been produced with the financial assistance of the European Union. The
views herein can in no way be taken to reflect the official position of the European Union
or the Member States.
TABLE OF CONTENTS 9
Table of Contents
Foreword ................................................................................................................................................ 3
Acknowledgements ................................................................................................................................ 5
Abbreviations and Acronyms ............................................................................................................. 25
Executive summary ............................................................................................................................. 29
Economic context and the role of SMEs in the Western Balkans and Turkey .............................. 33
The economic context ........................................................................................................................ 33
SME sector performance in the Western Balkans and Turkey .......................................................... 39
References.......................................................................................................................................... 51
Policy framework and assessment process ........................................................................................ 53
Introduction........................................................................................................................................ 53
Overview of the 2019 assessment framework ................................................................................... 53
The assessment process ..................................................................................................................... 56
Strengths and limitations ................................................................................................................... 59
Overview of key findings..................................................................................................................... 61
Key findings by dimension ................................................................................................................ 62
2019 SME Policy Index scores for the Western Balkans and Turkey ............................................... 67
Part I. Assessment findings by SBA Dimension................................................................................ 73
Chapter 1. Entrepreneurial learning and women’s entrepreneurship (Dimension 1) in the
Western Balkans and Turkey ............................................................................................................. 75
Key findings....................................................................................................................................... 76
Introduction........................................................................................................................................ 79
Assessment framework ...................................................................................................................... 80
Analysis ............................................................................................................................................. 81
Conclusions........................................................................................................................................ 95
Notes .................................................................................................................................................. 96
References.......................................................................................................................................... 97
Chapter 2. Bankruptcy and second chance for SMEs (Dimension 2) in the Western Balkans
and Turkey ......................................................................................................................................... 101
Key findings..................................................................................................................................... 102
Introduction...................................................................................................................................... 104
Assessment framework .................................................................................................................... 105
Analysis ........................................................................................................................................... 107
Conclusions...................................................................................................................................... 129
Notes ................................................................................................................................................ 129
References........................................................................................................................................ 131
10  TABLE OF CONTENTS
Annex 2.A. An overview of entrepreneurial perception and attitude in the Western Balkans and
Turkey .............................................................................................................................................. 134
Annex 2.B. The structure of the OECD insolvency indicators ........................................................ 136
Annex 2.C. An overview of second chance programmes in selected EU Member States ............... 137
Chapter 3. Institutional and regulatory framework for SME policy making (Dimension 3) in
the Western Balkans and Turkey .................................................................................................... 139
Key findings..................................................................................................................................... 140
Introduction...................................................................................................................................... 143
Analysis ........................................................................................................................................... 145
Conclusions...................................................................................................................................... 165
Notes ................................................................................................................................................ 166
References........................................................................................................................................ 166
Chapter 4. Operational environment for SMEs (Dimension 4) in the Western Balkans and
Turkey ................................................................................................................................................ 171
Key findings..................................................................................................................................... 172
Introduction...................................................................................................................................... 175
Analysis ........................................................................................................................................... 177
Conclusions...................................................................................................................................... 200
Notes ................................................................................................................................................ 200
References........................................................................................................................................ 201
Chapter 5. Support services for SMEs (Dimension 5a) in the Western Balkans and Turkey .... 205
Key findings..................................................................................................................................... 206
Introduction...................................................................................................................................... 208
Analysis ........................................................................................................................................... 210
Conclusions...................................................................................................................................... 230
Notes ................................................................................................................................................ 230
References........................................................................................................................................ 231
Chapter 6. Public procurement (Dimension 5b) in the Western Balkans and Turkey ............... 235
Key findings..................................................................................................................................... 236
Introduction...................................................................................................................................... 238
Analysis ........................................................................................................................................... 241
Conclusions...................................................................................................................................... 258
Notes ................................................................................................................................................ 259
References........................................................................................................................................ 259
Annex 6.A. Indicators for assessing public procurement policies for SMEs ................................... 261
Chapter 7. Access to finance for SMEs (Dimension 6) in the Western Balkans and Turkey ..... 263
Key findings..................................................................................................................................... 264
Introduction...................................................................................................................................... 267
Analysis ........................................................................................................................................... 270
Conclusions...................................................................................................................................... 287
TABLE OF CONTENTS  11
Notes ................................................................................................................................................ 287

References........................................................................................................................................ 288
Chapter 8. Standards and technical regulations (Dimension 7) in the Western Balkans and
Turkey ................................................................................................................................................ 291
Key findings..................................................................................................................................... 292
Introduction...................................................................................................................................... 294
Analysis ........................................................................................................................................... 297
Conclusions...................................................................................................................................... 317
Notes ................................................................................................................................................ 317
References........................................................................................................................................ 318
Further reading................................................................................................................................. 321
Chapter 9. Enterprise skills (Dimension 8a) in the Western Balkans and Turkey ..................... 323
Key findings..................................................................................................................................... 324
Introduction...................................................................................................................................... 327
Analysis ........................................................................................................................................... 329
Conclusions...................................................................................................................................... 339
Notes ................................................................................................................................................ 340
References........................................................................................................................................ 340
Chapter 10. Innovation policy for SMEs (Dimension 8b) in the Western Balkans and Turkey 345
Key findings..................................................................................................................................... 346
Introduction...................................................................................................................................... 349
Analysis ........................................................................................................................................... 352
Conclusions...................................................................................................................................... 376
Notes ................................................................................................................................................ 377
References........................................................................................................................................ 377
Chapter 11. SMEs in a green economy (Dimension 9) in the Western Balkans and Turkey ..... 381
Key findings..................................................................................................................................... 382
Introduction...................................................................................................................................... 384
Analysis ........................................................................................................................................... 387
Conclusions...................................................................................................................................... 401
Notes ................................................................................................................................................ 402
References........................................................................................................................................ 403
Further reading................................................................................................................................. 405
Chapter 12. Internationalisation of SMEs (Dimension 10) in the Western Balkans and
Turkey ................................................................................................................................................ 407
Key findings..................................................................................................................................... 408
Introduction...................................................................................................................................... 411
Analysis ........................................................................................................................................... 413
Conclusions...................................................................................................................................... 444
Notes ................................................................................................................................................ 445
References........................................................................................................................................ 447
Annex 12.A. Trade facilitation performance ................................................................................... 453
Part II. – Small Business Act assessment: Western Balkans and Turkey profiles ..................... 455
Chapter 13. Albania: Small Business Act profile ........................................................................... 457
Key findings..................................................................................................................................... 458
Economic context and role of SMEs ............................................................................................... 461
Assessment and recommendations .................................................................................................. 469
Entrepreneurial learning and women’s entrepreneurship (Dimension 1) ........................................ 472
Bankruptcy and second chance for SMEs (Dimension 2) ............................................................... 475
Institutional and regulatory framework for SME policy making (Dimension 3) ............................. 480
Operational environment for SMEs (Dimension 4) ......................................................................... 484
Support services for SMEs (Dimension 5a)..................................................................................... 490
Public procurement (Dimension 5b) ................................................................................................ 493
Access to finance for SMEs (Dimension 6) ..................................................................................... 496
Standards and technical regulations (Dimension 7) ......................................................................... 500
Enterprise skills (Dimension 8a) ...................................................................................................... 505
Innovation policy for SMEs (Dimension 8b)................................................................................... 507
SMEs in a green economy (Dimension 9) ....................................................................................... 510
Internationalisation of SMEs (Dimension 10) ................................................................................. 513
Conclusions...................................................................................................................................... 517
Notes ................................................................................................................................................ 517
References........................................................................................................................................ 518
Further reading ................................................................................................................................ 523
Chapter 14. Bosnia and Herzegovina: Small Business Act profile ............................................... 525
Key findings..................................................................................................................................... 526
Institutional and regulatory framework for SME policy making (Dimension 3)............................. 549
Conclusions...................................................................................................................................... 587
Notes ................................................................................................................................................ 587
References........................................................................................................................................ 589
Further reading................................................................................................................................. 594
Chapter 15. Kosovo: Small Business Act profile ............................................................................ 595
Key findings..................................................................................................................................... 596

Bankruptcy and second chance (Dimension 2) ................................................................................ 615
Conclusions...................................................................................................................................... 660
Notes ................................................................................................................................................ 660
References........................................................................................................................................ 661
Further reading................................................................................................................................. 666
Chapter 16. Montenegro: Small Business Act profile .................................................................... 667
Key findings..................................................................................................................................... 668
Operational environment (Dimension 4) ......................................................................................... 695
Conclusions...................................................................................................................................... 730
Notes ................................................................................................................................................ 731
References........................................................................................................................................ 732
Further reading................................................................................................................................. 737
Chapter 17. North Macedonia: Small Business Act profile ........................................................... 739
Key findings..................................................................................................................................... 740
Assessment and Recommendations ................................................................................................. 752

Conclusions...................................................................................................................................... 802
Notes ................................................................................................................................................ 802
References........................................................................................................................................ 804
Further reading................................................................................................................................. 809
Chapter 18. Serbia: Small Business Act profile .............................................................................. 811
Key findings..................................................................................................................................... 812
Bankruptcy and second chance (Dimension 2) ................................................................................ 830
Innovation policy (Dimension 8b) ................................................................................................... 860
Conclusions...................................................................................................................................... 873
References........................................................................................................................................ 876
Further reading................................................................................................................................. 880
Annex 18.A. The OECD Scoreboard Indicators .............................................................................. 881
Chapter 19. Turkey: Small Business Act profile ............................................................................ 883
Key findings..................................................................................................................................... 884
Institutional and regulatory framework for SME policy making (Dimension 3)............................. 910
Conclusions...................................................................................................................................... 952
Notes ................................................................................................................................................ 954
References........................................................................................................................................ 956
Further reading................................................................................................................................. 961
Annex 19.A. OECD Scoreboard Indicators ..................................................................................... 963

Methodology for the 2019 Small Business Act assessment: .......................................... 965
Overview of the 2019 assessment framework and scoring .............................................................. 965
Main changes to the assessment framework since the 2016 SBA assessment ................................ 967
Annex B. The Small Business Act assessment’s scoring model for Bosnia and Herzegovina .... 971
Constitutional set-up of Bosnia and Herzegovina............................................................................ 971
The 2019 SBA Assessment of Bosnia and Herzegovina ................................................................. 971
Notes: ............................................................................................................................................... 973
Annex C. Semi-structured interviews with private sector representatives .................................. 975
Introduction...................................................................................................................................... 975
Methodology and implementation ................................................................................................... 975
Tables
Table 1. Overview: WBT economies’ EU accession status (2018)....................................................... 34

Table 2. Selected structural indicators (2017) ....................................................................................... 35
Table 3. Selected economic indicators for the Western Balkans and Turkey (2013-17) ...................... 37
Table 4. Number of SMEs per 1 000 inhabitants (2017)....................................................................... 39
Table 5. SME sector statistics (2017 or latest year available) ............................................................... 41
Table 6. Distribution of SMEs by sector (2017 or latest year available) .............................................. 42
Table 7. SMEs’ employment share by sector (2017 or latest year available) ....................................... 43
Table 8. SMEs’ share of value added by sector (2017 or latest year available) .................................... 44
Table 9. The Small Business Act assessment framework and its links to the SBA principles.............. 54
Table 10. Description of score levels .................................................................................................... 56
Table 11. Strengths and limitations of the SME Policy Index 2019 ..................................................... 59
Table 12. 2019 SME Policy Index Scores ............................................................................................. 67
Table 1.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 1 ........... 77
Table 1.2. Scores for Sub-dimension 1.1: Entrepreneurial learning...................................................... 82
Table 1.3. Scores for Sub-dimension 1.2: Women’s entrepreneurship ................................................. 89
Table 2.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 2 ......... 103
Table 2.2. Key changes in the composition of Dimension 2 ............................................................... 106
Table 2.3. Scores for Sub-dimension 2.1: Preventive measures.......................................................... 111
Table 2.4. Scores for Sub-dimension 2.2: Survival and bankruptcy procedures ................................. 117
Table 2.5. An overview of insolvency laws adopted or amended in the WBT since 2016 ................. 119
Table 2.6. Scores for Sub-dimension 2.4: Promoting second chance ................................................. 125
Table 2.C.1. An overview of second chance programmes in 14 EU Member States .......................... 137
Table 3.3. Scores for Sub-dimension 3.1: Institutional framework ..................................................... 147
Table 3.4. Statistics collected in the WBT economies ........................................................................ 150
Table 3.5. Scores for Sub-dimension 3.2: Legislative simplification and regulatory impact analysis 153
Table 3.6. Scores for Sub-dimension 3.3: Public-private consultations .............................................. 159
Table 3.7. Share of laws adopted through a shortened procedure circumventing PPCs in the WBT
region (2016) ............................................................................................................................... 160
Table 4.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 4......... 173
Table 4.3. Scores for Sub-dimension 4.1: Digital government services for enterprises...................... 178
Table 4.4. Scores for Sub-dimension 4.2: Company registration ........................................................ 185
Table 4.5. Number of days to start a business (2008-18) .................................................................... 188
Table 4.6. Scores for Sub-dimension 4.3: Business licensing ............................................................. 190
Table 4.7. Sub-dimension 4.4: Tax compliance procedures for SMEs – overview ............................ 194
Table 5.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 5a ....... 207
Table 5.2. Provision of publicly (co-)funded business support services to SMEs (2017) ................... 210
Table 5.3. Scores for Sub-dimension 5a.1: Business support services provided by the government .. 213
Table 5.4. Main strategy documents for BSS provision to SMEs in the Western Balkans and
Turkey ......................................................................................................................................... 213
Table 5.5. Dedicated institutions responsible for BSS provision in the WBT economies .................. 216
Table 5.6. The six steps to approaching monitoring and evaluation ................................................... 222
Table 5.7. Scores for Sub-dimension 5a.2: Government initiatives to stimulate private business
support services ........................................................................................................................... 223
Table 6.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 5b....... 237
Table 6.2. Key changes in the composition of Dimension 5b ............................................................. 241
Table 6.3. Scores for Dimension 5b: Public procurement ................................................................... 242
Table 7.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 6......... 265
Table 7.3. Key banking sector indicators (2008-18) ........................................................................... 271
Table 7.4. Scores for Sub-dimension 6.1: Legal and regulatory framework ....................................... 272
Table 7.5. Credit information coverage in the WBT economies (2008-18) ........................................ 273
Table 7.6. Scores for Sub-dimension 6.2: Bank financing .................................................................. 276
Table 7.7. Scores for Sub-dimension 6.3: Non-bank financing .......................................................... 280
Table 7.8. Venture capital by stage ..................................................................................................... 283
Table 7.9. Scores for Sub-dimension 6.4: Venture capital ecosystem ................................................ 283
Table 7.10. Scores for Sub-dimension 6.5: Financial literacy............................................................. 286
Table 8.3. Scores for Sub-dimension 7.1: Overall co-ordination and general measures ..................... 300
Table 7.4. Scores for Sub-dimension 7.2: Harmonisation with the EU acquis ................................... 302
Table 8.5. Adoption of European standards in the Western Balkans and Turkey ............................... 303
Table 8.6. Scope of European accreditation agreements in the WBT economies ............................... 306
Table 8.7. Scores for Sub-dimension 7.3: SME access to standardisation .......................................... 312
Table 9.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 8a ....... 325
Table 9.2. Scores for Dimension 8a: Enterprise skills ........................................................................ 330
Table 10.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 8b ..... 347
Table 10.2. Key changes in the composition of Dimension 8b ........................................................... 352
Table 10.3. Horizon 2020 portfolio (2014-18) .................................................................................... 354
Table 10.4. Scores for Sub-dimension 8b.1: Policy framework for innovation .................................. 356
Table 10.5. Overview of smart specialisation in the Western Balkans and Turkey ............................ 359
Table 10.6. Scores for Sub-dimension 8b.2: Government institutional support services for
innovative SMEs ......................................................................................................................... 361
Table 10.7. Scores for Sub-dimension 8b.3: Government financial support services for innovative
SMEs ........................................................................................................................................... 365
Table 10.8. Scores for Sub-dimension 8b.4: SME and research institution collaboration and
technology transfer ...................................................................................................................... 371
Table 11.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 9 ....... 383
Table 11.2. Key changes in the composition of Dimension 9 ............................................................. 387
Table 11.3. Scores for Sub-dimension 9.1: Framework for environmental policies targeting SMEs . 389
Table 11.4. Scores for Sub-dimension 9.2: Incentives and instruments for SME greening ................ 394
Table 12.1. Implementation of the SME Policy Index 2016 recommendations for Dimension 10..... 409
Table 12.2. Key changes in the composition of Dimension 10 ........................................................... 413
Table 12.3. Scores for Sub-dimension 10.1: Export promotion .......................................................... 417
Table 12.4. Main national strategies covering export promotion ........................................................ 417
Table 12.5. Scores for Sub-dimension 10.2: Integration of SMEs into global value chains ............... 427
Table 12.6. Dos and don’ts of modern cluster policy .......................................................................... 437
Table 12.7. Scores for Sub-dimension 10.3: Promoting the use of e-commerce ................................ 438
Table 13.1. Albania: Main macroeconomic indicators (2013-18) ....................................................... 462
Table 13.2. Recent business reforms in Albania ................................................................................. 464
Table 13.3. Definition of micro, small and medium-sized enterprises in Albania .............................. 467
Table 13.4. Number of registered companies in Albania by enterprise size and district (2013 -
2017)............................................................................................................................................ 469
Table 13.5. Description of score levels ............................................................................................... 471
Table 13.6. Scores for Dimension 1: Entrepreneurial learning and women’s entrepreneurship ......... 472
Table 13.7. Scores for Dimension 2: Bankruptcy and second chance................................................. 475
Table 13.8. Scores for Dimension 3: Institutional and regulatory framework for SME policy
making ......................................................................................................................................... 480
Table 13.9. Scores for Dimension 4: Operational environment for SMEs .......................................... 484
Table 13.10. An overview of e-services in Albania ............................................................................ 485
Table 13.11. Categories of licences for businesses ............................................................................. 487
Table 13.12. Scores for Dimension 5a: Support services for SMEs ................................................... 490
Table 13.13. Scores for Dimension 5b: Public procurement ............................................................... 493
Table 13.14. Scores for Dimension 6: Access to finance for SMEs.................................................... 496
Table 13.15. Scores for Dimension 7: Standards and technical regulations ....................................... 500
Table 13.16. Scores for Dimension 8a: Enterprise skills .................................................................... 505
Table 13.17. Scores for Dimension 8b: Innovation policy for SMEs ................................................. 507
Table 13.18. Scores for Dimension 9: SMEs in a green economy ...................................................... 510
Table 13.19. Scores for Dimension 10: Internationalisation of SMEs ................................................ 513
Table 14.1. Bosnia and Herzegovina: Main macroeconomic indicators (2013-18) ............................ 530
Table 14.2. Recent business reforms in Bosnia and Herzegovina ....................................................... 533
Table 14.3. Definition of micro, small and medium-sized enterprises in the Federation of Bosnia
and Herzegovina .......................................................................................................................... 535
Table 14.4. Definition of micro, small and medium-sized enterprises in the Republika Srpska......... 535
Table 14.5. Definition of micro, small and medium-sized enterprises in the Brčko District .............. 536
Table 14.6. Number of registered companies in Bosnia and Herzegovina, by enterprise size and
entity and FBiH canton (2017) .................................................................................................... 538
Table 14.10. Number of bankrupt enterprises per year in the Republika Srpska (2013-16) ............... 545
making ......................................................................................................................................... 549
Table 14.12. Scores for Dimension 4: Operational environment for SMEs ........................................ 554
Table 14.15. Scores for Dimension 6: Access to finance .................................................................... 567
Table 15.1. Kosovo: Main macroeconomic indicators (2013-18) ....................................................... 599
Table 15.2. Recent business reforms in Kosovo ................................................................................. 603
Table 15.3. Definition of micro, small and medium-sized enterprises in Kosovo .............................. 605
Table 15.4. Number of registered companies in Kosovo by enterprise size and district..................... 607
Table 15.8. Overview of the changes introduced in the new insolvency framework .......................... 616
making ......................................................................................................................................... 620
Table 15.10. Scores for Dimension 4: Operational environment for SMEs ........................................ 625
Table 15.18. . Scores for Dimension 10: Internationalisation of SMEs .............................................. 655
Table 16.1. Montenegro: Main macroeconomic indicators (2013-18) ................................................ 672
Table 16.2. Recent business reforms in Montenegro .......................................................................... 674
Table 16.3. Definition of micro, small and medium-sized enterprises in Montenegro ....................... 676
Table 16.4. Number of registered companies in Montenegro by enterprise size and municipality
(2017) .......................................................................................................................................... 678
Table 16.8. Scores for institutional and regulatory framework for SME policy making .................... 690
Table 16.9. Scores for Dimension 4: Operational environment .......................................................... 695
Table 17.1. North Macedonia: Main macroeconomic indicators (2013-18) ...................................... 744
Table 17.2. Recent business reforms in North Macedonia .................................................................. 747
Table 17.3. Definition of micro, small and medium-sized enterprises in North Macedonia............... 749
Table 17.4 Number of registered companies in North Macedonia by enterprise size and region
(2013 and 2017)........................................................................................................................... 751
making ......................................................................................................................................... 762
Table 17.10. An overview of e-services hosted by different institutions in North Macedonia ........... 767
Table 18.1. Serbia: Main macroeconomic indicators (2013-18) ......................................................... 816
Table 18.2. Recent business reforms in Serbia .................................................................................... 819
Table 18.3. Definition of micro, small and medium-sized enterprises in Serbia ................................ 821
Table 18.4. Number of registered companies in Serbia by enterprise size and region (2017) ............ 823
Table 18.6 Scores for Dimension 1: Entrepreneurial learning and women’s entrepreneurship .......... 825
Table 18.8 Scores for Dimension 3: Institutional and regulatory framework for SME policy making834
Table 18.10. Scores for Dimension 5a: Business support services ..................................................... 844
Table 18.15. Scores for Dimension 8b: Innovation policy .................................................................. 860
Table 19.1. Turkey: Main macroeconomic indicators (2013-18) ........................................................ 889
Table 19.2. Recent business reforms in Turkey .................................................................................. 891
Table 19.3. Definition of micro, small and medium-sized enterprises in Turkey ............................... 894
making ......................................................................................................................................... 910
Table 19.9. Scores for Dimension 5a: Support services for SMEs ..................................................... 921
Table 19.11. Scores for Dimension 6: Access to finance .................................................................... 928
Table A.1. Description of score levels ................................................................................................ 966
Table A.2. Overview of changes to the SBA assessment .................................................................... 967
Table A.3. Data types and sources ...................................................................................................... 970
Table B.1. Overview of the four scoring models ................................................................................ 972
Table B.2. Application of the scoring models to the SBA dimensions ............................................... 972
Table C.1. Standardised interview question examples ........................................................................ 976
Annex Table 12.A.1. WBT performance on Trade Facilitation Indicators (2015-17) ........................ 453
Annex Table 12.A.2. Cost to import/export in terms of border compliance (2014 and 2017) ............ 454
Annex Table 18.A.1 Scoreboard for Serbia ........................................................................................ 881
Annex Table 19.A.1. Scoreboard for Turkey ...................................................................................... 963
Figures
Figure 1. GDP growth in the Western Balkans and Turkey (2013-17) ................................................. 36
Figure 2. Growth in the number of SMEs (2013-17) ............................................................................ 45
Figure 3. Growth in employment by the SME sector (2013-17) ........................................................... 46
Figure 4. Annual employment growth: SMEs versus large enterprises (2014-16) ............................... 47
Figure 5. Growth in value added generated by the SME sector (2013-17) ........................................... 48
Figure 6. Growth in value added: SMEs versus large enterprises (2013-16) ........................................ 49
Figure 7. Growth of SMEs’ share of exports (2013-17)........................................................................ 50
Figure 8. Annual growth in share of exports: SMEs versus large enterprises ....................................... 50
Figure 9. Overall assessment framework of the SME Policy Index 2019 ............................................. 54
Figure 10 Overview of the assessment process phases ......................................................................... 57
Figure 1.1. Overall scores for Dimension 1 (2016 and 2019) ............................................................... 77
Figure 1.2. Assessment framework for Dimension 1: Entrepreneurial learning and women’s
entrepreneurship ............................................................................................................................ 80
Figure 2.1. Overall scores for Dimension 2 (2016 and 2019) ............................................................. 103
Figure 2.2. Assessment framework for Dimension 2: Bankruptcy and second chance for SMEs ...... 106
Figure 2.3. Time taken to resolve insolvency (2008-18) Years .......................................................... 108
Figure 2.4. Cost of resolving insolvency (2008-18) % of estate ........................................................ 109
Figure 2.5. Recovery rate for resolving insolvency (2008-18) Cents on the dollar ............................ 110
Figure 3.2. Assessment framework for Dimension 3: Institutional and regulatory framework for
SME policy making ..................................................................................................................... 144
Figure 3.3. Worldwide Governance Indicators: Regulatory quality in the Western Balkans and
Turkey region (2016)................................................................................................................... 146
Figure 3.4. Global Competitiveness Index 2017-2018: Burden of government regulation in the
Western Balkans and Turkey region (2017) ................................................................................ 146
Figure 4.2. Assessment framework for Dimension 4: Operational environment for SMEs ................ 176
Figure 4.3. Number of procedures required to start a business (2008-18) .......................................... 187
Figure 4.4. Cost of starting a business (2008-18) ................................................................................ 189
Figure 4.5. VAT registration thresholds compared ............................................................................. 198
Figure 5.1. Overall scores for Dimension 5a (2016 and 2019) ........................................................... 207
Figure 5.2. Assessment framework for Dimension 5a: Support services for SMEs ........................... 209
Figure 5.3. SMEs’ uptake of BSSs (2017) .......................................................................................... 211
Figure 5.4. Local availability of specialised training services (2015-18) Score 1 (low) to 7 (high) ... 212
Figure 6.1. Overall scores for Dimension 5b (2016 and 2019) ........................................................... 236
Figure 6.2. Assessment framework for Dimension 5b: Public procurement ....................................... 239
Figure 7.2. Assessment framework for Dimension 6: Access to finance for SMEs............................ 269
Figure 8.2. A national quality infrastructure system ........................................................................... 294
Figure 8.3. Assessment framework for Dimension 7: Standards and technical regulations ............... 296
Figure 8.4. Share of EU exports in total WBT exports (2007-17) ...................................................... 298
Figure 8.5. WBT exports of goods to the European Union (2007-17) ................................................ 299
Figure 9.1. Overall scores for Dimension 8a (2016 and 2019) ........................................................... 325
Figure 9.2. Assessment framework for Dimension 8a: Enterprise skills ............................................ 328
Figure 10.1. Overall scores for Dimension 8b (2016 and 2019) ......................................................... 347
Figure 10.2. Assessment framework for Dimension 8b: Innovation policy for SMEs ....................... 351
Figure 10.3. WBT innovation scores in the Global Competitiveness Index (2008 and 2017) ............ 353
Figure 10.4. R&D expenditure as a share of GDP (2008 and 2016) ................................................... 354
Figure 10.5. Share of innovating firms in the WBT region (2016) ..................................................... 355
Figure 10.6. Intellectual property protection scores in the Global Competitiveness Index (2016-18) 374
Figure 11.1. Overall scores for Dimension 9 (2016 and 2019) ........................................................... 383
Figure 11.2. Assessment framework for Dimension 9: SMEs in a green economy ............................ 386
Figure 11.3. SME greening business activities and support in Western Balkans and Turkey ............ 388
Figure 12.1. Overall scores for Dimension 10 (2016 and 2019) ......................................................... 409
Figure 12.2. Assessment framework for Dimension 10: Internationalisation of SMEs ...................... 412
Figure 12.3. Exports as a percentage of GDP (2014-17)..................................................................... 414
Figure 12.4. Share of exports by enterprise size class (2017) ............................................................. 415
Figure 12.5. SMEs’ share of exports (2014-17) .................................................................................. 416
Figure 12.6. Local supplier quality (2013-18) ..................................................................................... 428
Figure 12.7. State of cluster development (2014-18) .......................................................................... 434
Figure 12.8. Personal use of e-commerce (2017-18)........................................................................... 439
Figure 12.9. SME use of e-commerce for sales (2017-18) .................................................................. 440
Figure 13.1. Small Business Act scores for Albania (2016 and 2019) ................................................ 458
Figure 13.2. Business demography indicators in Albania (2013 and 2016) ........................................ 467
Figure 13.3. Sectoral distribution of SMEs in Albania (2016) ............................................................ 468
Figure 14.1. Small Business Act scores for Bosnia and Herzegovina (2016 and 2019) ..................... 526
Figure 14.2. Business demography indicators in Bosnia and Herzegovina (2013 and 2017) ............. 536
Figure 14.3. Sectoral distribution of SMEs in Bosnia and Herzegovina (2017) ................................. 537
Figure 15.1. SBA scores for Kosovo (2016 and 2019) ....................................................................... 596
Figure 15.2. Business demography indicators in Kosovo (2013 and 2016) ........................................ 606
Figure 15.3. Sectoral distribution of SMEs in Kosovo (2016) ............................................................ 607
Figure 16.1. Small Business Act scores for Montenegro (2016 and 2019) ......................................... 668
Figure 16.2. Business demography indicators in Montenegro (2013 and 2017) ................................. 677
Figure 16.3. Sectoral distribution of SMEs in Montenegro by sector (2017) ..................................... 678
Figure 17.1. Small Business Act scores for North Macedonia (2016 and 2019) ............................... 740
Figure 17.2. Business demography indicators in North Macedonia (2013 and 2017) ........................ 750
Figure 17.3. Sectoral distribution of SMEs in Republic of North Macedonia (2017) ......................... 751
Figure 18.1. Small Business Act scores for Serbia (2016 and 2019) .................................................. 812
Figure 18.2. Business demography indicators in Serbia (2013 and 2017) .......................................... 822
Figure 18.3. Sectoral distribution of SMEs in Serbia (2017) .............................................................. 822
Figure 19.1. Small Business Act scores for Turkey (2016 and 2019) ................................................. 884
Figure 19.2. Business demography indicators in Turkey (2013 and 2017) ......................................... 895
Figure 19.3. Sectoral distribution of SMEs in Turkey (2017) ............................................................. 896
Figure A 1. Dimension, sub-dimension and indicator level examples ................................................ 965
Figure A.2. Scoring breakdown per sub-dimension ............................................................................ 967
Figure A.3. Structure of private sector interviews............................................................................... 969
Figure 2.A.1. Fear of failure among entrepreneurs in the WBT region before starting a business ..... 134
Figure 2.A.2. Has the problem of late payment by other private companies caused your business to
experience cash-flow problems? (2017) ...................................................................................... 135
Figure 2.A.3. Have you had to launch a court action to resolve an overdue payment issue (either as
a result of your or another company’s responsibility)? (2017).................................................... 135
Boxes
Box 1. The WBT economies’ EU accession status ............................................................................... 34

Box 2. Refinements to the assessment framework ................................................................................ 55
Box 1.1. Good practice in promoting the entrepreneurship key competence in vocational education:
Serbia’s Chemical Technology School ......................................................................................... 84
Box 1.2. France’s Women’s Entrepreneurship Plan.............................................................................. 93
Box 1.3. Training for women running high-potential start-ups: Ireland’s Female High Fliers
programme..................................................................................................................................... 95
Box 2.1. La procédure d'alerte in France............................................................................................ 113
Box 2.2. Entrepreneurial potential self-assessment ............................................................................. 114
Box 2.3. Early Warning Europe .......................................................................................................... 115
Box 2.4. Montenegro’s new insolvency regulations ........................................................................... 120
Box 2.5. An overview of insolvency indicators .................................................................................. 122
Box 2.6. Slovenia’s post-crisis insolvency regime .............................................................................. 124
Box 2.7. The Failure Institute – “Understanding businesses through failure” .................................... 127
Box 2.8. 60 000 Rebonds non-profit association: Helping French entrepreneurs rebound from
failure........................................................................................................................................... 128
Box 3.1. Serbia’s legislative reviews under the regulatory reform strategy ........................................ 154
Box 3.2. The SME test: How to measure the impact of regulations on SMEs .................................... 157
Box 3.3. Denmark’s Business Forum for Better Regulation ............................................................... 158
Box 3.4. Montenegro’s Business Caravan – reaching out to SMEs for a better business environment162
Box 3.5. Monitoring PPCs in Kosovo ................................................................................................. 163
Box 3.6. Using ICT tools to foster PPCs – the Slovak Republic’s consultation portal ....................... 164
Box 4.1. Serbia’s Open Data – Open Opportunities project (2017-19)............................................... 180
Box 4.2. Aporta: Adding value to open government data in Spain ..................................................... 182
Box 4.3. X-Road: Estonia’s system for interoperable government service delivery and data
exchange ...................................................................................................................................... 183
Box 4.4. Montenegro’s eUprava portal ............................................................................................... 191
Box 4.5. Businessinfo.cz: A one-stop shop for businesses ................................................................. 193
Box 4.6. The Régimen de Incorporación Fiscal in Mexico ................................................................ 195
Box 5.1. The standardised mentoring service provided by the Development Agency of Serbia ........ 217
Box 5.2. Impact assessment of KOSGEB’s Design Support .............................................................. 220
Box 5.3. Effective monitoring of SME and entrepreneurship programmes and policies .................... 221
Box 5.4. The Korean SME Training Consortiums Program ............................................................... 227
Box 5.5. Italy’s NIBI-Promos programme: Doing Business Abroad with NIBI................................. 228
Box 6.1. Good practice in simplifying evidence requirements in Serbia ............................................ 246
Box 6.2. Good practice in public procurement training ...................................................................... 251
Box 6.3. Good practice in reusing stored information on economic operators: France and Serbia ... 253
Box 6.4. Good practice in assessing and addressing public procurement obstacles faced by SMEs:
Montenegro and Belgium ............................................................................................................ 254
Box 6.5. Good practice in dividing procurement into lots: Portugal and France ................................ 258
Box 7.1. Strengthening SME access to capital market finance: The Progress Market in Croatia and
Slovenia ....................................................................................................................................... 274
Box 7.2. Good practice design features of credit guarantee schemes ................................................. 278
Box 7.3. Factoring and leasing legislative reform in Montenegro ...................................................... 281
Box 7.4. Public sector support to boost business angel activity in Turkey ......................................... 284
Box 8.1. TEHNIS: Serbia’s information portal and database ............................................................. 301
Box 8.2. Standardisation education by the Turkish Standards Institution ........................................... 305
Box 8.3. Bosnia and Herzegovina’s guide for economic operators .................................................... 308
Box 8.4. Innovative products and solutions offered by national standards bodies in the EU and the
OECD .......................................................................................................................................... 310
Box 8.5. Austria’s Living Standards Award ....................................................................................... 313
Box 8.6. How the Dutch standards development organisation increases SME access to standards ... 315
Box 8.7. Increasing SME access to standardisation in Germany ........................................................ 316
Box 9.1. Turkey’s Ex Point Programme: helping SMEs internationalise through training ............... 337
Box 9.2. Building the international capacity of growth-oriented SMEs ............................................. 338
Box 10.1. Smart specialisation policies in the Western Balkans and Turkey ..................................... 359
Box 10.2. Selected technology extension programmes in OECD countries ....................................... 363
Box 10.3. Tax incentives for R&D and innovation ............................................................................. 367
Box 10.4. Turkey’s tax incentives to foster R&D and innovation ...................................................... 368
Box 10.5. Fostering industry-academia collaboration in Serbia.......................................................... 372
Box 10.6. Sweden’s National Incubator Programme: Performance-based support ............................ 375
Box 11.1. Increasing resource efficiency: Turkey Materials Marketplace .......................................... 393
Box 11.2. Enhancing SME energy efficiency in Turkey: creating energy management units in
Organised Industrial Zones.......................................................................................................... 396
Box 11.3. Green Business Ireland: raising awareness of greening advantages to SMEs and
enhancing resource efficiency ..................................................................................................... 399
Box 11.4. Financial support for green investments: France’s Banque publique d’investissement ..... 401
Box 12.1. Evidence for the impact of export promotion agencies on exports..................................... 418
Box 12.2. SME support through the Enterprise Europe Network ....................................................... 420
Box 12.3. Nudge Turkey: Designing user-friendly policies for exporting SMEs ............................... 423
Box 12.4. Turkey’s UR-GE programme and the Izmir Footwear Cluster Support Project................. 432
Box 12.5. The OECD Tokyo Action Statement for Strengthening the Role of SMEs in Global
Value Chains ............................................................................................................................... 435
Box 12.6. Good practice examples of national supplier development programmes ........................... 436
Box 12.7. The Recommendation of the OECD Council on Consumer Protection in E-commerce:
Implementation Principles ........................................................................................................... 444
Box 13.1. Economic Reform Programmes .......................................................................................... 463
Box 13.2. Early Warning Europe ........................................................................................................ 478
Box 13.3 Denmark’s Business Forum for Better Regulation .............................................................. 483
Box 13.4. Aporta: Adding value to open government data in Spain ................................................... 488
Box 13.5. The independent evaluation of AIDA’s co-financing support funds .................................. 491
Box 13.6. Austrian Standards International’s start-up packages ......................................................... 503
Box 13.7. Green Business Ireland: Raising awareness of greening advantages to SMEs and
Box 13.8. The Czech Republic’s Supplier Development Programme ................................................ 516
Box 14.2. Slovenia: A post-crisis insolvency regime .......................................................................... 547
Box 14.4. Reaching out to SMEs to develop a more favourable business environment:
Montenegro’s Business Caravan ................................................................................................. 552
Box 14.5. X-Road: Estonia’s system for interoperable government service delivery and data
exchange ...................................................................................................................................... 557
Box 14.6. The Development Agency of Serbia’s standardised mentoring service ............................. 560
Box 15.1. EU Economic Reform Programmes.................................................................................... 602
Box 15.2. France’s Women’s Entrepreneurship Plan.......................................................................... 613
Box 15.4. Better Regulation Strategy 2.0 (2017-21) ........................................................................... 621

Box 15.5. The Professional Standardisation Council: Towards better private sector involvement in
national standardisation ............................................................................................................... 641
Box 15.6. Confartigianato Imprese: SME guidelines for implementing the CE mark ....................... 643
Box 15.7. Kosovar-German Innovation and Training Park in Prizren ................................................ 650
Box 15.8. Green Business Ireland: Raising awareness of greening advantages to SMEs and
Box 16.1. Economic reform programmes ........................................................................................... 673
Box 16.2. New insolvency regulations ................................................................................................ 686
Box 16.4 Montenegro’s Business Caravan: reaching out to SMEs for a better business environment 693
Box 16.5. Montenegro’s eUprava portal ............................................................................................. 698
Box 16.6. Hungary: Two simplified tax regimes for SMEs ................................................................ 699
Box 16.8. The Israel Innovation Authority ......................................................................................... 721
Box 16.9. Increasing resource efficiency: the Turkey Materials Marketplace .................................... 725
Box 17.3 The Development Agency of Serbia’s standardised mentoring service .............................. 771
Box 17.4. Increasing SME participation in standards development: lessons from OECD and EU
best practice ................................................................................................................................. 785
Box 17.5. The Economic Growth Plan: The new industrial policy support framework ..................... 791
Box 17.6 Enhancing SME energy efficiency in Turkey: Energy Management Units in special
industrial zones ............................................................................................................................ 796
Box 18.1. Serbia’s Economic Reform Programmes ............................................................................ 817
Box 18.2 A second chance to run a business in Spain ........................................................................ 833
Box 18.3 Strategy for Regulatory Reform in Serbia (2016-20) .......................................................... 835
Box 18.4 The Public-Private Dialogue for Growth Project (2018-21) ................................................ 836
Box 18.5. The Open Data – Open Opportunities project (2017-19) ................................................... 840
Box 18.6. Income tax simplification measures in OECD countries .................................................... 843
Box 18.8. Serbia’s information portal TEHNIS .................................................................................. 855
Box 18.9. Fostering industry academia collaboration in Serbia .......................................................... 862
Box 18.10. Ireland’s Green Business Programme ............................................................................... 866
Box 18.11. The e-business Development Programme in Serbia ......................................................... 871
Box 18.12. The Czech Republic’s Supplier Development Programme .............................................. 872
Box 19.2. Turkey’s E-Graduate Monitoring Portal ............................................................................. 902
Box 19.4. SME policies in the Presidency’s 2019 Annual Work Plan................................................ 911
Box 19.5. Denmark’s Business Forum for Better Regulation ............................................................. 914
Box 19.6. Tools to foster public consultations: The Slovak Republic’s government consultation
portal............................................................................................................................................ 915
Box 19.7. Enhancing SME energy efficiency in Turkey: Creating energy management units in
special industrial zones ................................................................................................................ 944
Box 19.8. Nudge Turkey: Designing user-friendly policies for exporting SMEs through behavioural
economics .................................................................................................................................... 949
ABBREVIATIONS AND ACRONYMS  25
Abbreviations and Acronyms
AIDA Albanian Investment Development Agency

ALL Albanian lek
APPRM Agency for the Promotion of Entrepreneurship (North Macedonia)
ASEAN Association of Southeast Asian Nations
B2B Business-to-business
BAM Bosnia and Herzegovina convertible mark
BAN Business angel network
BDC Business Development Bank (Canada)
BSS Business support service
CAB Conformity assessment body
CAGR Compound annual growth rate
CCIS Chamber of Commerce and Industry of Serbia
Cedefop European Centre for the Development of Vocational Training
CEFTA Central European Free Trade Agreement
CEN European Committee for Standardization
CENELEC European Committee for Electrotechnical Standardization
CGS Credit guarantee scheme
COSME Competitiveness of Enterprises and Small and Medium-Sized
Enterprises
DG Exports Directorate General of Exports (Turkey)
DIN Deutsches Institut für Normung
EA European co-operation for Accreditation
EA BLA EA Bilateral Agreement
EA MLA EA Multilateral Agreement
EBRD European Bank for Reconstruction and Development
EC European Commission
EEN Enterprise Europe Network
EFTA European Free Trade Association
EIC European Innovation Council
26  ABBREVIATIONS AND ACRONYMS
eIDAS Authentication and Trust Services Regulation

EIF European Interoperability Framework
EMS Environmental management system
ENIF Enterprise Innovation Fund
EPA Export promotion agency
ESPP Electronic System of Public Procurement
ETF European Training Foundation
EU European Union
EURAMET European Association of National Metrology Institutes
FBiH Federation of Bosnia and Herzegovina
FDI Foreign direct investment
FITD Fund for Innovation and Technology Development
(North Macedonia)
FMRPO Federal Ministry of Development, Entrepreneurship and Crafts
(FBiH)
FX Foreign exchange
GCI Global Competitiveness Index
GCIP Global Cleantech Innovation Programme
GDP Gross domestic product
GFI Global Failure Index
GIZ Gesellschaft für Internationale Zusammenarbeit
GNI Gross national income
GVC Global value chain
ICT Information and communications technology
IPR Intellectual property rights
ISO International Organization for Standardization
JICA Japan International Cooperation Agency
JRC Joint Research Centre
KIESA Kosovo Investment and Enterprise Support Agency
KGF Credit Guarantee Fund (Turkey)
KOSGEB SME Development and Support Organisation (Turkey)
MKD Macedonian denar
MFI Microfinance institution
MNE Multinational enterprise
ABBREVIATIONS AND ACRONYMS  27
MoU Memorandum of understanding

MSME Micro, small and medium-sized enterprise
MXN Mexican peso
NACE Statistical classification of economic activities in the European
Community
NEN Netherlands Standardization Institute
NBFI Non-bank finance instrument
NGO Non-government organisation
NIP National Incubation Program (Sweden)
NPL Non-performing loan
NSO National standards organisation
NSSD National Strategy for Sustainable Development (Montenegro)
OECD Organisation for Economic Co-operation and Development
OGD Open government data
OIZ Organised Industrial Zone (Turkey)
PPA Public Procurement Authority
PPC Public-private consultation
PPC Public Procurement Commission
PPL Public Procurement Law
PPO Public Procurement Office
PPP Purchasing power parity
PSC Point of single contact
R&D Research and development
RARS Republic Agency for the Development of Small and Medium
Enterprises (RS)
RAS Serbian Development Agency
RDA Regional development agency (Serbia)
RIA Regulatory impact analysis
RIF Régimen de Incorporación Fiscal
RS Republika Srpska
RSD Serbian dinar
SATE Technological and Business Assistance System (Mexico)
SBA Small Business Act for Europe
SCEBN Scottish Circular Economy Business Network
SME Small and medium-sized enterprise
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These are the forces which have established the drift towards
democracy. When all sources of information are accessible to all
men alike, when the world’s thought and the world’s news are
scattered broadcast where the poorest may find them, the non-
democratic forms of government must find life a desperate venture.
Exclusive privilege needs privacy, but cannot have it. Kingship of the
elder patterns needs sanctity, but can find it nowhere obtainable in a
world of news items and satisfied curiosity. The many will no longer
receive submissively the thought of a ruling few, but insist upon
having opinions of their own. The reaches of public opinion have
been infinitely extended; the number of voices that must be heeded
in legislation and in executive policy has been infinitely multiplied.
Modern influences have inclined every man to clear his throat for a
word in the world’s debates. They have popularized everything they
have touched.
In the newspapers, it is true, there is very little concert between
the writers; little but piecemeal opinion is created by their comment
and argument; there is no common voice amidst their counsellings.
But the aggregate voice thunders with tremendous volume; and that
aggregate voice is ‘public opinion.’ Popular education and cheap
printing and travel vastly thicken the ranks of thinkers everywhere
that their influence is felt, and by rousing the multitude to take
knowledge of the affairs of government prepare the time when the
multitude will, so far as possible, take charge of the affairs of
government,—the time when, to repeat Carlyle’s phrase, democracy
will become palpably extant.
But, mighty as such forces are, democratic as they are, no one
can fail to perceive that they are inadequate to produce of
themselves such a government as ours. There is little in them of
constructive efficacy. They could not of themselves build any
government at all. They are critical, analytical, questioning, quizzing
forces; not architectural, not powers that devise and build. The
influences of popular education, of the press, of travel, of commerce,
of the innumerable agencies which nowadays send knowledge and
thought in quick pulsations through every part and member of
society, do not necessarily mould men for effective endeavor. They
may only confuse and paralyze the mind with their myriad stinging
lashes of excitement. They may only strengthen the impression that
“the world’s a stage,” and that no one need do more than sit and look
on through his ready glass, the newspaper. They overwhelm one
with impressions, but do they give stalwartness to his manhood? Do
they make his hand any steadier on the plough, or his purpose any
clearer with reference to the duties of the moment? They stream light
about him, it may be, but do they clear his vision? Is he better able to
see because they give him countless things to look at? Is he better
able to judge because they fill him with a delusive sense of knowing
everything? Activity of mind is not necessarily strength of mind. It
may manifest itself in mere dumb show; it may run into jigs as well
as into strenuous work at noble tasks. A man’s farm does not yield
its fruits the more abundantly in their season because he reads the
world’s news in the papers. A merchant’s shipments do not multiply
because he studies history. Banking is none the less hazardous to
the banker’s capital and taxing to his powers because the best
writing of the best essayists is to be bought cheap.
II.
Very different were the forces behind us. Nothing establishes the
republican state save trained capacity for self-government, practical
aptitude for public affairs, habitual soberness and temperateness of
united action. When we look back to the moderate sagacity and
steadfast, self-contained habit in self-government of the men to
whom we owe the establishment of our institutions in the United
States, we are at once made aware that there is no communion
between their democracy and the radical thought and restless spirit
called by that name in Europe. There is almost nothing in common
between popular outbreaks such as took place in France at her great
Revolution and the establishment of a government like our own. Our
memories of the year 1789 are as far as possible removed from the
memories which Europe retains of that pregnant year. We
manifested one hundred years ago what Europe lost, namely, self-
command, self-possession. Democracy in Europe, outside of
closeted Switzerland, has acted always in rebellion, as a destructive
force: it can scarcely be said to have had, even yet, any period of
organic development. It has built such temporary governments as it
has had opportunity to erect on the old foundations and out of the
discredited materials of centralized rule, elevating the people’s
representatives for a season to the throne, but securing almost as
little as ever of that every-day local self-government which lies so
near to the heart of liberty. Democracy in America, on the other
hand, and in the English colonies has had, almost from the first, a
truly organic growth. There was nothing revolutionary in its
movements; it had not to overthrow other polities; it had only to
organize itself. It had not to create, but only to expand, self-
government. It did not need to spread propaganda: it needed nothing
but to methodize its ways of living.
In brief, we were doing nothing essentially new a century ago.
Our strength and our facility alike inhered in our traditions; those
traditions made our character and shaped our institutions. Liberty is
not something that can be created by a document; neither is it
something which, when created, can be laid away in a document, a
completed work. It is an organic principle,—a principle of life,
renewing and being renewed. Democratic institutions are never
done; they are like living tissue, always a-making. It is a strenuous
thing, this of living the life of a free people; and our success in it
depends upon training, not upon clever invention.
Our democracy, plainly, was not a body of doctrine; it was a
stage of development. Our democratic state was not a piece of
developed theory, but a piece of developed habit. It was not created
by mere aspirations or by new faith; it was built up by slow custom.
Its process was experience, its basis old wont, its meaning national
organic oneness and effective life. It came, like manhood, as the fruit
of youth. An immature people could not have had it, and the maturity
to which it was vouchsafed was the maturity of freedom and self-
control. Such government as ours is a form of conduct, and its only
stable foundation is character. A particular form of government may
no more be adopted than a particular type of character maybe
adopted: both institutions and character must be developed by
conscious effort and through transmitted aptitudes.
Governments such as ours are founded upon discussion, and
government by discussion comes as late in political as scientific
thought in intellectual development. It is a habit of state life created
by long-established circumstance, and is possible for a nation only in
the adult age of its political life. The people who successfully
maintain such a government must have gone through a period of
political training which shall have prepared them by gradual steps of
acquired privilege for assuming the entire control of their affairs.
Long and slowly widening experience in local self-direction must
have prepared them for national self-direction. They must have
acquired adult self-reliance, self-knowledge, and self-control, adult
soberness and deliberateness of judgment, adult sagacity in self-
government, adult vigilance of thought and quickness of insight.
When practised, not by small communities, but by wide nations,
democracy, far from being a crude form of government, is possible
only amongst peoples of the highest and steadiest political habit. It is
the heritage of races purged alike of hasty barbaric passions and of
patient servility to rulers, and schooled in temperate common
counsel. It is an institution of political noonday, not of the half-light of
political dawn. It can never be made to sit easily or safely on first
generations, but strengthens through long heredity. It is poison to the
infant, but tonic to the man. Monarchies may be made, but
democracies must grow.
It is a deeply significant fact, therefore, again and again to be
called to mind, that only in the United States, in a few other
governments begotten of the English race, and in Switzerland, where
old Teutonic habit has had the same persistency as in England, have
examples yet been furnished of successful democracy of the modern
type. England herself is close upon democracy. Her backwardness in
entering upon its full practice is no less instructive as to the
conditions prerequisite to democracy than is the forwardness of her
offspring. She sent out to all her colonies which escaped the luckless
beginning of being made penal settlements, comparatively small,
homogeneous populations of pioneers, with strong instincts of self-
government, and with no social materials out of which to build
government otherwise than democratically. She herself, meanwhile,
retained masses of population never habituated to participation in
government, untaught in political principle either by the teachers of
the hustings or of the school house. She has had to approach
democracy, therefore, by slow and cautious extensions of the
franchise to those prepared for it; while her better colonies, born into
democracy, have had to receive all comers within their pale. She has
been paring down exclusive privileges and levelling classes; the
colonies have from the first been asylums of civil equality. They have
assimilated new while she has prepared old populations.
Erroneous as it is to represent government as only a
commonplace sort of business, little elevated in method above
merchandising, and to be regulated by counting-house principles,
the favor easily won for such views among our own people is very
significant. It means self-reliance in government. It gives voice to the
eminently modern democratic feeling that government is no hidden
cult, to be left to a few specially prepared individuals, but a common,
every-day concern of life, even if the biggest such concern. It is this
self-confidence, in many cases mistaken, no doubt, which is
gradually spreading among other peoples, less justified in it than are
our own.
One cannot help marvelling that facts so obvious as these
should have escaped the perception of some of the sagest thinkers
and most thorough historical scholars of our day. Yet so it is. Sir
Henry Maine, even, the great interpreter to Englishmen of the
historical forces operative in law and social institutions, has utterly
failed, in his plausible work on Popular Government, to distinguish
the democracy, or rather the popular government, of the English
race, which is bred by slow circumstance and founded upon habit,
from the democracy of other peoples, which is bred by discontent
and founded upon revolution. He has missed that most obvious
teaching of events, that successful democracy differs from
unsuccessful in being a product of history,—a product of forces not
suddenly become operative, but slowly working upon whole peoples
for generations together. The level of democracy is the level of
every-day habit, the level of common national experiences, and lies
far below the elevations of ecstasy to which the revolutionist climbs.
III.
While there can be no doubt about the derivation of our
government from habit rather than from doctrine, from English
experience rather than from European thought; while it is evident
that our institutions were originally but products of a long, unbroken,
unperverted constitutional history; and certain that we shall preserve
our institutions in their integrity and efficiency only so long as we
keep true in our practice to the traditions from which our first strength
was derived, there is, nevertheless, little doubt that the forces
peculiar to the new civilization of our day, and not only these, but
also the restless forces of European democratic thought and
anarchic turbulence brought to us in such alarming volume by
immigration, have deeply affected and may deeply modify the forms
and habits of our politics.
All vital governments—and by vital governments I mean those
which have life in their outlying members as well as life in their heads
—all systems in which self-government lives and retains its self-
possession, must be governments by neighbors, by peoples not only
homogeneous, but characterized within by the existence among their
members of a quick sympathy and an easy neighborly knowledge of
each other. Not foreseeing steam and electricity or the diffusion of
news and knowledge which we have witnessed, our fathers were
right in thinking it impossible for the government which they had
founded to spread without strain or break over the whole of the
continent. Were not California now as near neighbor to the Atlantic
States as Massachusetts then was to New York, national self-
government on our present scale would assuredly hardly be
possible, or conceivable even. Modern science, scarcely less than
our pliancy and steadiness in political habit, may be said to have
created the United States of to-day.
Upon some aspects of this growth it is very pleasant to dwell,
and very profitable. It is significant of a strength which it is inspiring
to contemplate. The advantages of bigness accompanied by
abounding life are many and invaluable. It is impossible among us to
hatch in a corner any plot which will affect more than a corner. With
life everywhere throughout the continent, it is impossible to seize
illicit power over the whole people by seizing any central offices. To
hold Washington would be as useless to a usurper as to hold Duluth.
Self-government cannot be usurped.
A French writer has said that the autocratic ascendency of
Andrew Jackson illustrated anew the long-credited tendency of
democracies to give themselves over to one hero. The country is
older now than it was when Andrew Jackson delighted in his power,
and few can believe that it would again approve or applaud childish
arrogance and ignorant arbitrariness like his; but even in his case,
striking and ominous as it was, it must not be overlooked that he was
suffered only to strain the Constitution, not to break it. He held his
office by orderly election; he exercised its functions within the letter
of the law; he could silence not one word of hostile criticism; and, his
second term expired, he passed into private life as harmlessly as did
James Monroe. A nation that can quietly reabsorb a vast victorious
army is no more safely free and healthy than is a nation that could
reabsorb such a President as Andrew Jackson, sending him into
seclusion at the Hermitage to live without power, and die almost
forgotten.
A huge, stalwart body politic like ours, with quick life in every
individual town and county, is apt, too, to have the strength of variety
of judgment. Thoughts which in one quarter kindle enthusiasm may
in another meet coolness or arouse antagonism. Events which are
fuel to the passions of one section may be but as a passing wind to
another section. No single moment of indiscretion, surely, can easily
betray the whole country at once. There will be entire populations
still cool, self-possessed, unaffected. Generous emotions sometimes
sweep whole peoples, but, happily, evil passions, sinister views,
base purposes, do not and cannot. Sedition cannot surge through
the hearts of a wakeful nation as patriotism can. In such organisms
poisons diffuse themselves slowly; only healthful life has unbroken
course. The sweep of agitations set afoot for purposes unfamiliar or
uncongenial to the customary popular thought is broken by a
thousand obstacles. It may be easy to reawaken old enthusiasms,
but it must be infinitely hard to create new ones, and impossible to
surprise a whole people into unpremeditated action.
It is well to give full weight to these great advantages of our big
and strenuous and yet familiar way of conducting affairs; but it is
imperative at the same time to make very plain the influences which
are pointing toward changes in our politics—changes which threaten
loss of organic wholeness and soundness. The union of strength
with bigness depends upon the maintenance of character, and it is
just the character of the nation which is being most deeply affected
and modified by the enormous immigration which, year after year,
pours into the country from Europe. Our own temperate blood,
schooled to self-possession and to the measured conduct of self-
government, is receiving a constant infusion and yearly experiencing
a partial corruption of foreign blood. Our own equable habits have
been crossed with the feverish humors of the restless Old World. We
are unquestionably facing an ever-increasing difficulty of self-
command with ever-deteriorating materials, possibly with
degenerating fibre. We have so far succeeded in retaining
“Some sense of duty, something of a faith,

Some reverence for the laws ourselves have made,
Some patient force to change them when we will,
Some civic manhood firm against the crowd;”
But we must reckon our power to continue to do so with a people

made up of “minds cast in every mould of race,—minds inheriting
every bias of environment, warped by the diverse histories of a score
of different nations, warmed or chilled, closed or expanded, by
almost every climate on the globe.”
What was true of our early circumstances is not true of our
present. We are not now simply carrying out under normal conditions
the principles and habits of English constitutional history. Our tasks
of construction are not done. We have not simply to conduct, but
also to preserve and freshly adjust our government. Europe has sent
her habits to us, and she has sent also her political philosophy, a
philosophy which has never been purged by the cold bath of
practical politics. The communion which we did not have at first with
her heated and mistaken ambitions, with her radical, speculative
habit in politics, with her readiness to experiment in forms of
government, we may possibly have to enter into now that we are
receiving her populations. Not only printing and steam and electricity
have gotten hold of us to expand our English civilization, but also
those general, and yet to us alien, forces of democracy of which
mention has already been made; and these are apt to tell
disastrously upon our Saxon habits in government.
IV.
It is thus that we are brought to our fourth and last point. We
have noted (1) the general forces of democracy which have been
sapping old forms of government in all parts of the world; (2) the
error of supposing ourselves indebted to those forces for the creation
of our government, or in any way connected with them in our origins;
and (3) the effect they have nevertheless had upon us as parts of the
general influences of the age, as well as by reason of our vast
immigration from Europe. What, now, are the new problems which
have been prepared for our solution by reason of our growth and of
the effects of immigration? They may require as much political
capacity for their proper solution as any that confronted the
architects of our government.
These problems are chiefly problems of organization and
leadership. Were the nation homogeneous, were it composed simply
of later generations of the same stock by which our institutions were
planted, few adjustments of the old machinery of our politics would,
perhaps, be necessary to meet the exigencies of growth. But every
added element of variety, particularly every added element of foreign
variety, complicates even the simpler questions of politics. The
dangers attending that variety which is heterogeneity in so vast an
organism as ours are, of course, the dangers of disintegration—
nothing less; and it is unwise to think these dangers remote and
merely contingent because they are not as yet very menacing. We
are conscious of oneness as a nation, of vitality, of strength, of
progress; but are we often conscious of common thought in the
concrete things of national policy? Does not our legislation wear the
features of a vast conglomerate? Are we conscious of any national
leadership? Are we not, rather, dimly aware of being pulled in a
score of directions by a score of crossing influences, a multitude of
contending forces?
This vast and miscellaneous democracy of ours must be led; its
giant faculties must be schooled and directed. Leadership cannot
belong to the multitude; masses of men cannot be self-directed,
neither can groups of communities. We speak of the sovereignty of
the people, but that sovereignty, we know very well, is of a peculiar
sort; quite unlike the sovereignty of a king or of a small, easily
concerting group of confident men. It is judicial merely, not creative.
It passes judgment or gives sanction, but it cannot direct or suggest.
It furnishes standards, not policies. Questions of government are
infinitely complex questions, and no multitude can of themselves
form clear-cut, comprehensive, consistent conclusions touching
them. Yet without such conclusions, without single and prompt
purposes, government cannot be carried on. Neither legislation nor
administration can be done at the ballot box. The people can only
accept the governing act of representatives. But the size of the
modern democracy necessitates the exercise of persuasive power
by dominant minds in the shaping of popular judgments in a very
different way from that in which it was exercised in former times. “It is
said by eminent censors of the press,” said Mr. Bright on one
occasion in the House of Commons, “that this debate will yield about
thirty hours of talk, and will end in no result. I have observed that all
great questions in this country require thirty hours of talk many times
repeated before they are settled. There is much shower and much
sunshine between the sowing of the seed and the reaping of the
harvest, but the harvest is generally reaped after all.” So it must be in
all self-governing nations of to-day. They are not a single audience
within sound of an orator’s voice, but a thousand audiences. Their
actions do not spring from a single thrill of feeling, but from slow
conclusions following upon much talk. The talk must gradually
percolate through the whole mass. It cannot be sent straight through
them so that they are electrified as the pulse is stirred by the call of a
trumpet. A score of platforms in every neighborhood must ring with
the insistent voice of controversy; and for a few hundreds who hear
what is said by the public speakers, many thousands must read of
the matter in the newspapers, discuss it interjectionally at the
breakfast-table, desultorily in the street-cars, laconically on the
streets, dogmatically at dinner; all this with a certain advantage, of
course. Through so many stages of consideration passion cannot
possibly hold out. It gets chilled by over-exposure. It finds the
modern popular state organized for giving and hearing counsel in
such a way that those who give it must be careful that it is such
counsel as will wear well. Those who hear it handle and examine it
enough to test its wearing qualities to the utmost. All this, however,
when looked at from another point of view, but illustrates an infinite
difficulty of achieving energy and organization. There is a certain
peril almost of disintegration attending such phenomena.
Every one now knows familiarly enough how we accomplished
the wide aggregations of self-government characteristic of the
modern time, how we have articulated governments as vast and yet
as whole as continents like our own. The instrumentality has been
representation, of which the ancient world knew nothing, and lacking
which it always lacked national integration. Because of
representation and the railroads to carry representatives to distant
capitals, we have been able to rear colossal structures like the
government of the United States as easily as the ancients gave
political organization to a city; and our great building is as stout as
was their little one.
But not until recently have we been able to see the full effects of
thus sending men to legislate for us at capitals distant the breadth of
a continent. It makes the leaders of our politics, many of them, mere
names to our consciousness instead of real persons whom we have
seen and heard, and whom we know. We have to accept rumors
concerning them, we have to know them through the variously
colored accounts of others; we can seldom test our impressions of
their sincerity by standing with them face to face. Here certainly the
ancient pocket republics had much the advantage of us: in them
citizens and leaders were always neighbors; they stood constantly in
each other’s presence. Every Athenian knew Themistocles’s
manner, and gait, and address, and felt directly the just influence of
Aristides. No Athenian of a later period needed to be told of the
vanities and fopperies of Alcibiades, any more than the elder
generation needed to have described to them the personality of
Pericles.
Our separation from our leaders is the greater peril, because
democratic government more than any other needs organization in
order to escape disintegration; and it can have organization only by
full knowledge of its leaders and full confidence in them. Just
because it is a vast body to be persuaded, it must know its
persuaders; in order to be effective, it must always have choice of
men who are impersonated policies. Just because none but the
finest mental batteries, with pure metals and unadulterated acids,
can send a current through so huge and yet so rare a medium as
democratic opinion, it is the more necessary to look to the excellence
of these instrumentalities. There is no permanent place in
democratic leadership except for him who “hath clean hands and a
pure heart.” If other men come temporarily into power among us, it is
because we cut our leadership up into so many small parts, and do
not subject any one man to the purifying influences of centred
responsibility. Never before was consistent leadership so necessary;
never before was it necessary to concert measures over areas so
vast, to adjust laws to so many interests, to make a compact and
intelligible unit out of so many fractions, to maintain a central and
dominant force where there are so many forces.
It is a noteworthy fact that the admiration for our institutions
which has during the past few years so suddenly grown to large
proportions among publicists abroad is almost all of it directed to the
restraints we have effected upon the action of government. Sir Henry
Maine thought our federal Constitution an admirable reservoir, in
which the mighty waters of democracy are held at rest, kept back
from free destructive course. Lord Rosebery has wondering praise
for the security of our Senate against usurpation of its functions by
the House of Representatives. Mr. Goldwin Smith supposes the
saving act of organization for a democracy to be the drafting and
adoption of a written constitution. Thus it is always the static, never
the dynamic, forces of our government which are praised. The
greater part of our foreign admirers find our success to consist in the
achievement of stable safeguards against hasty or retrogressive
action; we are asked to believe that we have succeeded because we
have taken Sir Archibald Alison’s advice, and have resisted the
infection of revolution by staying quite still.
But, after all, progress is motion, government is action. The
waters of democracy are useless in their reservoirs unless they may
be used to drive the wheels of policy and administration. Though we
be the most law-abiding and law-directed nation in the world, law has
not yet attained to such efficacy among us as to frame, or adjust, or
administer itself. It may restrain, but it cannot lead us; and I believe
that unless we concentrate legislative leadership—leadership, that
is, in progressive policy—unless we give leave to our nationality and
practice to it by such concentration, we shall sooner or later suffer
something like national paralysis in the face of emergencies. We
have no one in Congress who stands for the nation. Each man
stands but for his part of the nation; and so management and
combination, which may be effected in the dark, are given the place
that should be held by centred and responsible leadership, which
would of necessity work in the focus of the national gaze.
What is the valuable element in monarchy which causes men
constantly to turn to it as to an ideal form of government, could it but
be kept pure and wise? It is its cohesion, its readiness and power to
act, its abounding loyalty to certain concrete things, to certain visible
persons, its concerted organization, its perfect model of progressive
order. Democracy abounds with vitality; but how shall it combine with
its other elements of life and strength this power of the governments
that know their own minds and their own aims? We have not yet
reached the age when government may be made impersonal.
The only way in which we can preserve our nationality in its
integrity and its old-time originative force in the face of growth and
imported change is by concentrating it; by putting leaders forward,
vested with abundant authority in the conception and execution of
policy. There is plenty of the old vitality in our national character to
tell, if we will but give it leave. Give it leave, and it will the more
impress and mould those who come to us from abroad. I believe that
we have not made enough of leadership.
“A people is but the attempt of many

To rise to the completer life of one;
And those who live as models for the mass
Are singly of more value than they all.”
We shall not again have a true national life until we compact it by

such legislative leadership as other nations have. But once thus
compacted and embodied, our nationality is safe. An acute English
historical scholar has said that “the Americans of the United States
are a nation because they once obeyed a king;” we shall remain a
nation only by obeying leaders.
“Keep but the model safe,

New men will rise to study it.”
V
GOVERNMENT UNDER THE CONSTITUTION
It is by no means wholly to our advantage that our constitutional

law is contained in definitive written documents. The fact that it is
thus formulated and rendered fixed and definite has seriously misled
us, it is to be feared, as to the true function and efficacy of
constitutional law. That law is not made more valid by being written,
but only more explicit; it is not rendered more sacred, but only more
definite and secure. Written constitutions are simply more or less
successful generalizations of political experience. Their tone of
authority does not at all alter the historical realities and imperative
practical conditions of government. They determine forms, utter
distinct purposes, set the powers of the State in definite hierarchy;
but they do not make the forms they originate workable, or the
purposes they utter feasible. All that must depend upon the men who
become governors and upon the people over whom they are set in
authority. Laws can have no other life than that which is given them
by the men who administer and the men who obey them.
Constitutional law affords no exception to the rule. The Constitution
of the United States, happily, was framed by exceptional men
thoroughly schooled in the realities of government. It consists,
accordingly, not of principles newly invented, to be put into operation
by means of devices originated for the occasion, but of sound pieces
of tested experience. It has served its purpose beneficently, not
because it was written, but because it has proved itself accordant in
every essential part with tried principles of government—principles
tested by the race for whose use it was intended, and therefore
already embedded in their lives and practices. Its strength will be
found, upon analysis, to lie in its definiteness and in its power to
restrain rather than in any unusual excellence of its energetic parts.
For the right operation of these it has had to depend, like other
constitutions, upon the virtue and discretion of the people and their
ministers. “The public powers are carefully defined; the mode in
which they are to be exercised is fixed; and the amplest securities
are taken that none of the more important constitutional
arrangements shall be altered without every guarantee of caution
and every opportunity for deliberation.... It would seem that, by a
wise constitution, democracy may be made nearly as calm as water
D
in a great artificial reservoir.”
D
Sir Henry Maine: Popular Government (Am.
ed.), pp. 110, 111.
We possess, therefore, not a more suitable constitution than

other countries, but a constitution which is perfectly definite and
which is preserved by very formidable difficulties of amendment
against inconsiderate change. The difference between our own case
and that of Great Britain upon which we have most reason to
congratulate ourselves is that here public opinion has definite criteria
for its conservatism; whereas in England it has only shifting and
uncertain precedent. In both countries there is the same respect for
law. But there is not in England the same certainty as to what the law
of the constitution is. We have a fundamental law which is written,
and which in its main points is read by all alike in a single accepted
sense. There is no more quarrel about its main intent than there is in
England about the meaning of Magna Charta. Much of the British
constitution, on the contrary, has not the support of even a common
statute. It may, in respect of many vital parts of it, be interpreted or
understood in half a dozen different ways, and amended by the
prevalent understanding. We are not more free than the English; we
are only more secure.
The definiteness of our Constitution, nevertheless, apart from its
outline of structural arrangements and of the division of functions
among the several departments of the government, is negative
rather than affirmative. Its very enumeration of the powers of
Congress is but a means of indicating very plainly what Congress
can not do. It is significant that one of the most important and most
highly esteemed of the many legal commentaries on our government
should be entitled ‘Constitutional Limitations.’ In expounding the
restrictions imposed by fundamental law upon state and federal
action, Judge Cooley is allowed to have laid bare the most essential
parts of our constitutional system. It was a prime necessity in so
complex a structure that bounds should be set to authority. The
‘may-nots’ and the ‘shall-nots’ of our constitutions, consequently,
give them their distinctive form and character. The strength which
preserves the system is the strength of self-restraint.
And yet here again it must be understood that mere definiteness
of legal provision has no saving efficacy of its own. These distinct
lines run between power and power will not of their own virtue
maintain themselves. It is not in having such a constitution but in
obeying it that our advantage lies. The vitality of such provisions
consists wholly in the fact that they receive our acquiescence. They
rest upon the legal conscience, upon what Mr. Grote would have
called the ‘constitutional morality,’ of our race. They are efficient
because we are above all things law-abiding. The prohibitions of the
law do not assert themselves as taskmasters set over us by some
external power. They are of our own devising. We are self-
restrained.
This legal conscience manifestly constitutes the only guarantee,
for example, of the division of powers between the state and federal
governments, that chief arrangement of our constitutional system.
The integrity of the powers possessed by the States has from the
first depended solely upon the conservatism of the federal courts.
State functions have certainly not decayed; but they have been
preserved, not by virtue of any forces of self-defence of their own,
but because the national government has been vouchsafed the
grace of self-restraint. What curtailment their province might suffer
has been illustrated in several notable cases in which the Supreme
Court of the United States has confirmed to the general government
extensive powers of punishing state judicial and executive officers
for disobedience to state laws. Although the federal courts have
generally held Congress back from aggressions upon the States,
they have nevertheless once and again countenanced serious
encroachments upon state powers; and their occasional laxity of
principle on such points is sufficiently significant of the fact that there
is no balance between the state and federal governments, but only
the safeguard of a customary ‘constitutional morality’ on the part of
the federal courts. The actual encroachments upon state rights
which those courts have permitted, under the pressure of strong
political interests at critical periods, were not, however, needed to
prove the potential supremacy of the federal government. They only
showed how that potential supremacy would on occasion become
actual supremacy. There is no guarantee but that of conscience that
justice will be accorded a suitor when his adversary is both court and
opposing litigant. So strong is the instinct of those who administer
our governments to keep within the sanction of the law, that even
when the last three amendments to the Constitution were being
forced upon the southern states by means which were revolutionary
the outward forms of the Constitution were observed. It was none the
less obvious, however, with what sovereign impunity the national
government might act in stripping those forms of their genuineness.
As there are times of sorrow or of peril which try men’s souls and lay
bare the inner secrets of their characters, so there are times of
revolution which act as fire in burning away all but the basic
elements of constitutions. It is then, too, that dormant powers awake
which are not afterward readily lulled to sleep again.
Such was certainly the effect of the civil war upon the
Constitution of the Union. The implying of powers, once cautious, is
now become bold and confident. In the discussions now going
forward with reference to federal regulation of great corporations,
and with reference to federal aid to education, there are scores of
writers and speakers who tacitly assume the power of the federal
government to act in such matters, for one that urges a constitutional
objection. Constitutional objections, before the war habitual, have, it
would seem, permanently lost their prominence.
The whole energy of origination under our system rests with
Congress. It stands at the front of all government among us; it is the
single affirmative voice in national policy. First or last, it determines
what is to be done. The President, indeed, appoints officers and
negotiates treaties, but he does so subject to the ‘yes’ of the Senate.
Congress organizes the executive departments, organizes the army,
organizes the navy. It audits, approves, and pays expenses. It
conceives and directs all comprehensive policy. All else is negation.
The President says ‘no’ in his vetoes; the Supreme Court says ‘no’ in
its restraining decisions. And it is as much the law of public opinion
as the law of the Constitution that restrains the action of Congress.
It is the habit both of English and American writers to speak of
the constitution of Great Britain as if it were ‘writ in water,’ because
nothing but the will of Parliament stands between it and revolutionary
change. But is there nothing back of the will of Parliament?
Parliament dare not go faster than the public thought. There are vast
barriers of conservative public opinion to be overrun before a ruinous
speed in revolutionary change can be attained. In the last analysis,
our own Constitution has no better safeguard. We have, as I have
already pointed out, the salient advantage of knowing just what the
standards of our Constitution are. They are formulated in a written
code, wherein all men may look and read; whereas many of the
designs of the British system are to be sought only in a cloud-land of
varying individual readings of affairs. From the constitutional
student’s point of view, there are, for instance, as many different
Houses of Lords as there are writers upon the historical functions of
that upper chamber. But the public opinion of Great Britain is no
more a juggler of precedents than is the public opinion of this
country. Perhaps the absence of a written constitution makes it even
less a fancier of logical refinements. The arrangements of the British
constitution have, for all their theoretical instability, a very firm and
definite standing in the political habit of Englishmen: and the greatest
of those arrangements can be done away with only by the
extraordinary force of conscious revolution.
It is wholesome to observe how much of our own institutions
rests upon the same basis, upon no other foundations than those
that are laid in the opinions of the people. It is within the undoubted
constitutional power of Congress, for example, to overwhelm the
opposition of the Supreme Court upon any question by increasing
the number of justices and refusing to confirm any appointments to
the new places which do not promise to change the opinion of the
court. Once, at least, it was believed that a plan of this sort had been
carried deliberately into effect. But we do not think of such a violation
of the spirit of the Constitution as possible, simply because we share
and contribute to that public opinion which makes such outrages
upon constitutional morality impossible by standing ready to curse
them. There is a close analogy between this virtual inviolability of the
Supreme Court and the integrity hitherto vouchsafed to the English
House of Lords. There may be an indefinite creation of peers at any
time that a strong ministry chooses to give the sovereign its
imperative advice in favor of such a course. It was, doubtless, fear of
the final impression that would be made upon public opinion by
action so extraordinary, as much as the timely yielding of the Lords
upon the question at issue, that held the ministry back from such a
measure, on one notable occasion. Hitherto that ancient upper
chamber has had in this regard the same protection that shields our
federal judiciary.
It is not essentially a different case as between Congress and
the Executive. Here, too, at the very centre of the Constitution,
Congress stands almost supreme, restrained by public opinion rather
than by law. What with the covetous admiration of the presidency
recently manifested by some alarmed theorists in England, and the
renewed prestige lately given that office by the prominence of the
question of civil service reform, it is just now particularly difficult to
apply political facts to an analysis of the President’s power. But a
clear conception of his real position is for that very reason all the
more desirable. While he is a dominant figure in politics would seem
to be the best time to scrutinize and understand him.
It is clearly misleading to use the ascendant influence of the
President in effecting the objects of civil service reform as an
illustration of the constitutional size and weight of his office. The
principal part in making administration pure, business-like, and

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SME Policy Index Western Balkans and

Turkey 2019 Oecd

Lonely Planet Western Balkans Lonely Plant (Firm)

Europeanisation and Memory Politics in the Western

National Accounts of OECD Countries, Volume 2019 Issue

EU Enlargement and Civil Society in the Western Balkans

NATO and the Western Balkans: From Neutral Spectator to

The European Union and the Paradox of Enlargement: The

OECD Factbook 2015 Economic Environmental and Social

PISA Policy and the OECD Respatialising Global

ASSESSING THE IMPLEMENTATION

Please cite this publication as:

ISBN 978-92-64-31286-9 (print)

SME Policy Index

Photo credits: Cover © Designed by Caroline Lee, Spielplatz 13.

Corrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.

Angel Gurría Johannes Hahn Suma Chakrabarti Cesare Onestini

Notes ................................................................................................................................................ 287

Entrepreneurial learning and women’s entrepreneurship (Dimension 1) ........................................ 610

Enterprise skills (Dimension 8a) ...................................................................................................... 786

Annex 19.A. OECD Scoreboard Indicators ..................................................................................... 963

Table 1. Overview: WBT economies’ EU accession status (2018)....................................................... 34

Box 1. The WBT economies’ EU accession status ............................................................................... 34

Box 15.4. Better Regulation Strategy 2.0 (2017-21) ........................................................................... 621

Abbreviations and Acronyms

AIDA Albanian Investment Development Agency

eIDAS Authentication and Trust Services Regulation

MoU Memorandum of understanding

“Some sense of duty, something of a faith,

But we must reckon our power to continue to do so with a people

“A people is but the attempt of many

We shall not again have a true national life until we compact it by

“Keep but the model safe,

It is by no means wholly to our advantage that our constitutional

We possess, therefore, not a more suitable constitution than

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