The Role of SMEs in National Economies in East Asia: Studies of Small and Medium Sized Enterprises in East Asia, Volume II (review)

The Role of SMEs in National Economies in East Asia: Studies of Small and Medium Sized Enterprises in East Asia, Volume II. Edited by Charles Harvie and Boon Chye Lee. Cheltenham, UK: Edward Elgar, 2002. Pp. xx 4404 . Charles Harvie and Boon Chye Lee of the University of Wollongong in Australia have embarked on an interesting and ambitious project to publish a series on studies of various aspects of small and medium enterprises (SMEs) in East Asia. The four volumes focus on a number of important issues such as the impact of the regional crisis, the role of regional SMEs in the wake of globalization, etc. Volume II of this series focuses on the contribution and composition of SMEs in national economies in East Asia. Most of the papers in this volume were presented during a conference in Australia in June 2000. This book discusses the role of SMEs to the region. In particular, the various contributions to the book assess the importance of SMEs to creating employment, adopting innovation, and generating exporting opportunities. In addition, ample attention is given to SMEs as a source of future successful medium and large-scale business ventures. The book classifies the countries in the region in four categories: most underdeveloped regions (economies in transition), the newly industrializing economies in Southeast Asia, Korea, and Taiwan, and the most advanced countries in the region including Australia, Japan, and Singapore. Most chapters in the book follow the same structure. The authors commence with discussing how SMEs are defined in their specific case. They proceed with an overview of the contribution of SMEs to employment generation, gross national product, exports, etc. Then, impact of the financial crisis is assessed while, finally, government promotional efforts are reviewed. The various contributions show the diversity of the SME sector in the region. Hal's overview chapter notes that "They (SMEs) may range from a part-time business with no employees, for example, exchanging money or selling handicrafts in Indonesia, to a semi-conductor manufacturer employing hundreds of people" (p. 21). Most SMEs in the region are very small though, and, according to Hal, over 80 per cent employ fewer than five people. Most chapters of this book do not take the smallest enterprises into consideration. These so-called micro enterprises are very important for the poor that do not have access to better paid work, but they do not contribute very much to exports, national product, or overall economic growth. It is interesting but discouraging to see that, after all those years, SMEs in the region are still defined in so many different ways. In some countries, a distinction is made between micro enterprises and SMEs. In other countries, SMEs are defined in a broad way and include micro enterprises. Furthermore, there are also different definitions used within specific countries. This range of diverse definitions makes it difficult to compare the development of the SME sector among countries in the region. The chapters on SMEs in economies in transition look at the experiences of China and Vietnam. Harvie reports that the growth of socalled small town and village enterprises has been an unanticipated outcome of the process of economic reform in China. Harvie argues further that small enterprises need to adjust to remain competitive within the context of China's increasingly market-oriented economy. Government policies need to be reformed to adequately serve the growth of these enterprises. Richards and colleagues found for Vietnam that the authorities demonstrate considerable ambiguity in making similar reforms as in China to support further transformation of the SME sector. In the case of Vietnam, the impact of the regional financial crisis has been considerable as more than 60 per cent of the country's exports are to other Asian countries. The chapters on SMEs in Southeast Asia deal extensively with the impact of the crisis. Berry and Rodriguez review the experiences in the Philippines with specific attention for the electronics industry. These chapters point to the ASEAN Economic Bulletin 92 Vol. 20, No. 1, April 2003 limited impact of targeted government support to promote SMEs during both good times and bad. The Philippines case study and the paper by Hill on Indonesia highlight that...