and delivered in a format that is least disruptive to the production needs of SMEs. Following the example of SEP, the training would be co-funded by SMEs and VETA.

Similar initiatives have been used successfully in the Republic of Korea to organize Training Consortiums for group-based training of SMEs, with the costs of training financed in part by a payroll levy-rebate scheme (see Almeida and Cho chapter in Almeida et al., 2012). Mexico’s Integral Quality and Modernization Program (CIMO), now renamed PAC, is another example. It provides insights into how the SME training program achieved broad regional coverage with minimal investments in capital infrastructure. It also demonstrates how the program evolved from a traditional training program into one offering SMEs an integrated package of training and industrial extension services. Impact evaluations have found the CIMO program to be a costeffective training strategy, with tangible post-training improvements in several measures of firm performance (see Box 3).

# **Box 3. Mexico’s Proactive Training Programs for SMEs**

The Integral Quality and Modernization Program (CIMO), established in 1988 by the Mexican Secretariat of Labor, has proven effective in serving the training needs of small and mediumsize enterprises (SMEs). Set up initially to provide subsidized training, CIMO quickly evolved when it became apparent that lack of training was only one of many factors contributing to low productivity among SMEs. By 2000 CIMO was providing an integrated package of training and industrial extension services to over 80,000 small and medium-size enterprises each year and training to 200,000 employees, involving more than 300 business associations, up from 72 in 1988. While the program ceased to exist after a change in government, it offers some important lessons for training policy.

The CIMO program was designed to have broad regional coverage with minimal bureaucratic infrastructure. All states had at least one CIMO unit, each staffed by 3-4 promoters, housed in business associations, which contributed office and support infrastructure. Promoters organized workshops on training and technical assistance services, identified potential local and regional training suppliers and consulting agents, both public and private, and actively sought out SMEs to deliver assistance on a cost-sharing, time-limited basis. An initial diagnostic evaluation of firms was conducted as the basis for organizing training programs and other consulting and technical assistance. The government did not deliver this training; instead, its role was to identify qualified local training providers to deliver the training usually on a group or association basis so as to reduce unit training costs. This strategy was deliberate since one of the program’s objectives was to promote the development of regional training markets able to serve the needs of local enterprises.

Several rigorous evaluations have found CIMO to be a cost-effective way of assisting SMEs. While CIMO firms tended to have lower pre-program performance than a comparison group with similar attributes, their post-program outcome indicators tended to show relative improvements in indicators like labor productivity, capacity utilization, product quality, wages and employment.

45 Source: Tan and Lopez-Acevedo (2005)