INF/MSME/W/31  
 
20 April 2021  
(21-3401) Page: 1/1 
  Original: English  
 
INFORMAL WORKING GROUP ON MSMES  
INNOVATION POLICIES AND MSMES  
CONCEPT NOTE  
Communication from Ecuador  
The following communication, dated 20 April 2021 , is being circulated at the request of the 
delegation of Ecuador . 
 
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1  BACKGROUND  
1.1.  Innovation and entrepreneurship capacities are critical for increasing the participation of 
MSMEs in global trade. In this regard, innovation policies play a st rategic role in supporting the 
creation and growth of innovative and dynamic MSMEs. Contrary to the almost universal practice in 
developing countries of disassociating innovation policy from interventions to encourage business 
development and trade facilit ation, there is significant cross -over between both policy areas. The 
promotion of high -growth innovative MSMEs requires business policies that go beyond the 
development of management skills or the establishment of a favourable domestic business 
environmen t for MSMEs, and includes trade facilitation measures.  
1.2.  Fostering high -growth innovative MSMEs in developing countries requires addressing four main 
barriers: (i) the innovation capacity gap (i.e., most MSMEs do not know how to innovate); (ii) the 
financing  gap (i.e. even when they know how to innovate, MSMEs do not have the resources to do 
it); (iii) the challenge to access to more advanced technological, innovation and business advisory 
services (i.e. to allow innovative MSMEs access to the most promising entry points in national and 
global value chains and to identify windows of opportunity for latecomers to catch up and leapfrog); 
and (iv) limited opportunities to expand networks and collaborations with other firms and with 
academia (i.e., so MSMEs can ta ke advantage of knowledge and resources that are available in the 
national innovation system).  
1.3.  Effective innovation policies and policy instruments to foster innovative MSMEs should be 
tailored to increase the prevailing level of technological and innovative capacities of firms in the 
economy, the capacities available in the national innovation systems, and the market incentives in 
place to support innovation. They comprise a mix of policy instruments that address several policy 
areas, including tec hnology, industry, trade, investment, education, and infrastructure.  
1.4.  To address these gaps in MSME access to trade and innovation resources, Ecuador proposes 
issuing a questionnaire to members of the MSME Informal Working Group to compile information on 
existing policies and identify good practices. Locating Members' innovation policies, from 
collaborative platforms to direct financial support for MSMEs' is not straightforward and a 
questionnaire could provide much -needed information, especially from develo ping economies. R&D 
Questions would include whether or not there is a domestic innovation policy in place to support 
MSMEs in a Member's economy and whether this policy identifies trade, investment, or other 
potentially cross -border strategies to support a nd sustain MSME innovation.  
1.5.  Ecuador looks forward to your inputs on this initiative.  
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