E-commerce and export promotion policies for small- and medium-sized enterprises: East Asian and Latin American experiences

As in other parts of the world, small- and medium-sized enterprises (SMEs) in Latin America are important generators of employment while contributing to establishing certain social as well as regional 'equilibria' in the development process within the country. However, SMEs in Latin America are much less 'export-oriented'than their East Asian counterparts. SMEs in Latin America tend to produce import substitutes and non tradables while manufactured exports are still produced by large firms in relativelycapital-intensive ways. In contrast, many East Asian SMEs are vertically integrated and produce intermediate goods for large national firms or transnational companies (TNCs), which ultimately are the ones that export to the world markets. In Latin America, the term, 'e-commerce', has meant basically consumer-oriented on line retail commerce, in comparison to East Asia where it is increasingly involved in a broader range of ICT-enabled business transformations including intranets, extranets, 'Closed' and 'open' EDI, virtual private value-added network, and business applications of networked interactive multimedia. From this perspective, the longer term prosperity of E-commerce in Latin America will require a diversification in a number of directions, including the diffusionof E-commerce capability among SMEs in order to reduce the 'digital divide' among enterprises. SMEs should to be an integral part of local knowledge-intensive business networks with large national firms and TNCs and clusters among themselves,to promote web-based entrepreneurship, and to apply networking based on interactive ICTs. In doing so, SMEs can be key beneficiaries of the Internet and E-commerce. The expansion of ICT should facilitate the catching-up or even leap-frogging of Latin American SMEs in the area of export promotion, by easing the traditional constraints that they face in the area of market access, information, human resource development, venture capital and credit etc. ICTs should be business tools that not only strengthen SMEs'competitiveness in traditional sectors but also create new markets and develop new productive and management capacity. Therefore, ICTs should enable SMEs to be forward-looking and strategy-oriented rather than focusing on a static environment. To promote exports by way of ICTs, the governments should address the SME programs on E-commerce that cut across traditional support fields (market intelligence, finance, technical and human resources, etc.), in a global and integrated manner. Chapter I compares the 'export-orientation' of SMEs between Latin America and East Asia and calls for a new approach for SME policy making for Latin America, in light of new challenges and opportunities created by ICTs. The second chapter examines the 'e-readiness' of Latin American countries with that of East Asia, describes the use of ICT by SMEs, identifies the inhibiting factors for such use, and delineates E-commerce potentials for SME export promotion. The following chapter examines how a range of ICT-enabled business transformations including intranets, extranets, 'Closed' and 'open' EDI, and other business applications are changing the modes of inter-firm relations of SMEs with transnational companies, large national enterproses and among SMEs themselves. Chapter V provides policy actions, at three levels: the private, public and regional/multilateral.