Lima, March 27, 2004

It is a real pleasure to be here this morning and meet with you on behalf of the Foreign Affairs Minister. 

Concerning our subject today, “Cooperation for SMEs Territorial Competitiveness”, I believe that we are all aware of the fact that participating in the globalization process brings us opportunities and challenges. Obviously, we cannot share and enjoy the advantages of globalization if we do not have or develop the basic abilities that will allow us to do so. Thus, competitiveness and the development of competitive structures form part of the fundamental task to which the integration process must contribute.  

We know that, presently, the need for market expansion and to participate in international trade schemes is one of the conditions for economic growth. Our domestic companies, chiefly comprised of small and micro enterprises, must face competition in that globalized international market. 

To this effect, it is important to point out that over 90% of Latin American enterprises fit the Small and Micro Enterprise category, which on average employ a maximum of 20 persons. In the case of Peru, 98.7% of the total companies are SMEs, contributing with approximately 42% of the Gross Domestic Product (GDP), covering nearly 78% of the country’s work force. This information is no more than a confirmation of our day to day reality: that the great majority of productive activities in our region are locally carried out by SMEs.  

This should lead us to become aware of the transcendent importance of this majority group of small enterprises in terms of employment and income for the population, as well as for the territorial dissemination of technical development and economic growth. Certainly, this sector has generated in recent years almost 100% of the new jobs available in Latin America, employing approximately 120 million people, which makes it the region’s largest source of employment.  

This is why it is essential that the promotion of this type of enterprises should not be centered around welfare-oriented planning and policies, or to simply assume that international insertion will solve its modernization process; rather, we must have a consistent support and promotion policy with respect to the SMEs, to guide them through the path of innovation and business development.  

This necessarily implies combining the institutional strengthening of local governments, a more dynamic participation of the community and a quest for cooperation agreements between the public and private sectors. To this end, Peru agrees with the proposal made by the Secretary General’s Office to have competitiveness as a national strategy, to identify the areas in which the integration process will be able to contribute with a combined efforts platform, particularly on matters such as the development of physical infrastructure, educational policies, job training, “clusters” and production chains, industrial infrastructure and environmental policies.  

This realization also means the need to build new territorial competitive environments in our countries, which in turn should be associated with the development of competitiveness in Andean country territories and macro-regions, which comprise the major pillars of integration and development of the Initiative for the Integration of Regional Infrastructure in South America (IIRSA). 

The European experience, in this sense, could become a significant contribution, not only for reflection, but also for the exchange of knowledge and better practices with the European economic agents, which have attained a new level of territorial  competitiveness based on the potential of their local economies as an indispensable complement to national development policies. 

I believe it is necessary to highlight, at this point, the trascendent role to be played by the local and regional governments, which, due to their characteristics, do have significant advantages over the central governments; such as a greater capacity of representation and legitimacy among the voters, the possibility of being institutional agents of social and cultural integration of territorial communities and a greater flexibility and adaptability within changing contexts. 

Therefore, a strong effort ought to be made aimed at institutional coordination at the different territorial levels (regional, provincial and municipal) to set the bases for change in the productive and institutional organization and in the attitude and motivation of the economic, social and political agents of our countries, so that together, they will lift, in a permanent and sustainable manner, the quality of life of the people, through the harmonic and fair growth of the economy.  

Thank you very much