The Organisation for Economic Co-operation and Development has published a report finding that industrial strategies often prioritise large companies and do not sufficiently address the financing, skills, technology and market barriers facing manufacturing small and medium-sized enterprises. Manufacturing contributes about 16% of global gross domestic product and 14% of employment, while SMEs generated an average 41% of manufacturing value added and 57% of manufacturing employment across the OECD in 2023. The assessment covers the automotive, semiconductor and machinery sectors, drawing on policy approaches in France, Germany, Japan, Korea and the United States. The challenges differ by sector. Automotive suppliers must adapt to electric, connected and autonomous vehicles, with internal combustion engine suppliers facing particularly acute transition risks. Semiconductor SMEs can pursue opportunities in chip design, specialised materials, equipment and back-end services, but face high capital, intellectual property and skills barriers. Machinery SMEs must integrate software, automation and energy-efficient technologies while overcoming high investment costs and shortages of digital skills. The report recommends industrial policies that incorporate SME needs from the outset rather than relying on benefits to flow from support for larger firms. Priorities include R&D networks and regional clusters that connect SMEs with large companies and research bodies, place-based training and technology transfer, and simpler access to tailored funding and advice. Programmes should also accommodate differences in firms’ size, sector and readiness for transformation.

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