國際貿易中心：2023中小企業競爭力展望報告脆弱的小企業從生存到成長（英文版）（96頁）.pdf

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1、SME COMPETITIVENESS OUTLOOK 2023Small Businesses in Fragility:From Survival to Growth45Thought leadersBusiness voicesStreet address:ITC 54-56,rue de Montbrillant 1202 Geneva,SwitzerlandPostal address:ITC Palais des Nations 1211 Geneva 10,Switzerland Telephone:+41-22 730 0111Fax:+41-22 733 4439E-mail

2、:itcregintracen.orgInternet:http:/www.intracen.orgThe International Trade Centre(ITC)is the joint agency of the World Trade Organization and the United Nations.International Trade Centre 2023Small Businesses in Fragility:From Survival to Growth iiSME COMPETITIVENESS OUTLOOK 2023About the ReportThis

3、SME Competitiveness Outlook assesses the impact of conflict and fragility on business performance.It unveils a Fragility Exposure Index,and shows that fragility,as experienced by firms,can be reduced by 25%if they take actions to reinforce competitiveness.These include engaging with business support

4、 organizations,improving financial management and retaining skilled staff.The report finds that direct support to firms is helpful and must be complemented by reforms to promote peace and stability and improve the business environment.Humanitarian partners,development agencies and capable state inst

5、itutions must collaborate,coordinate and have a deep understanding of the context to avoid reinforcing the drivers of fragility,and maximize positive outcomes.Publisher:International Trade Centre(ITC)Title:SME Competitiveness Outlook 2023:Small Businesses in Fragility:From Survival to GrowthPublicat

6、ion date and place:Geneva,November 2023Page count:92Language:EnglishISBN:9789213586228Print ISBN:9789211036879Print ISSN:2519-1071e-ISSN:2519-1225UN Sales Number:E.23.III.T.2ITC Document Number:P142.E/RSE/DMD/23-XICitation:International Trade Centre(2023).SME Competitiveness Outlook 2023:Small Busin

7、esses in Fragility:From Survival to GrowthFor more information on ITCs SME Competitiveness Outlook,see http:/www.intracen.org/SMEOutlook/and ITCs Competitiveness Suveys,see:http:/www.intracen.org/resources/data-and-analysis/research-and-data.The designations employed and the presentation of material

8、 in this publication do not imply the expression of any opinion whatsoever on the part of the International Trade Centre concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries.All rights reserved.No part o

9、f this publication may be reproduced,stored in a retrieval system or transmitted in any form or by any means electronic,electrostatic,magnetic tape,mechanical,photocopying or otherwise,without prior permission in writing from the International Trade Centre.Digital image on the cover:Shutterstock and

10、 ITC International Trade Centre(ITC),www.intracen.org ITC is the joint agency of the World Trade Organization and the United Nations.SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHiiiContentsAcronyms viiAcknowledgements viiiForeword xAt a Glance xiiExecutive Summary xivCHAPTER 1:The vicious cy

11、cle of fragility 1A complex and persistent phenomenon 3 One concept,many definitions 3 Overcoming fragility takes time 5Trapped economies 5 Distorted production and consumption 5 Poor and fragile:Two sides of the same coin 6 SDGs seemingly out of reach 7Businesses:Surviving,not thriving 8 Misallocat

12、ed talent,a missed opportunity 8 Self-employment,a survival strategy 8 Lack of funding and innovation stunt growth 11 Fewer exporters,concentrated markets 13 More firms created,and failing 14CHAPTER 2:Fragility from a business perspective 17Fragility is multilevel and multidimensional 18 Measuring f

13、ragility at the firm level 18 Business location matters 18 Firm characteristics matter,too 23Adding insult to injury 25 Obstacles businesses cannot control 25 Double blow 26 Gloomy outlook 26CHAPTER 3:Competitiveness as a coping mechanism 29More competitive,less fragile 31 Competitiveness helps firm

14、s cope with fragility 31 Firms cannot insure against all risks 32 Fragility can trump competitiveness 33Boost competitiveness,confront fragility 35 Foster links to institutions,peers,buyers 35 Reduce financial constraints to growth 37 Identify entrepreneurial talent 38ivSME COMPETITIVENESS OUTLOOK 2

15、023CHAPTER 4:From survival to growth 41A two-pronged strategy 42 Top down:Peace and state capacity 42 Bottom up:Firm competitiveness 43Coordination,collaboration and context 45 Coordinate to lessen risks 46 Collaborate to tackle multiple challenges 46 Understand the context to do no harm 47Endnotes

16、54References 56Annex I:Methodology note and data sources 61 Definitions 61 ITC SME Competitiveness Surveys 61 ITC Small Business in Fragility Survey 63 ITC Fragility Exposure Index 64 ACLED 65 Notes on figures 66Figures1 State is term most frequently associated with fragility 22 Fragility persists a

17、nd grows 53 Business environment challenges abound 64 Fragility and low income are connected 65 Fragility hampers SDGs 76 Starting up:Red tape,high costs 107 Formal business creation decreases with fragility 108 Self-employment is high,mostly out of necessity 109 More businesses are small 1110 Innov

18、ation is survival-driven 1111 Market concentration,fewer exporters 1312 Entry and exit increase with fragility 1413 Firms experience fragility differently,across and within countries 1914 Businesses:wide range of security concerns 2015 Companies experience fragility more intensively as violence incr

19、eases 2016 Instability hurts economic performance 2217 Firms in poorer regions experience more fragility 2218 Low trust in government and institutions 2219 Firms experience fragility more strongly in regions with more inequality 2320 Small businesses experience high economic and security fragility 2

20、3SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHv21 Small firms less likely to pay for security 2322 Informal firms:more intense experience of fragility 2423 Women-owned businesses:more insecurity,instability 2424 Women-owned firms:more fragility in patriarchal regions 2425 Youth-led companies

21、:more economic fragility 2526 Obstacles more difficult to tackle in more fragile settings 2527 The double blow of fragility 2628 Firms increasingly pessimistic 2629 Competitiveness associated with lower experienced fragility 3130 Competitiveness reduces social impacts of fragility 3231 Competitive f

22、irms perceive less economic fragility 3232 Competitiveness is not a silver bullet 3333 Work with business bodies to support growth 3534 Keep financial records to fuel expansion 3835 Formal hiring practices underpin firm growth 3836 Two-pronged approach to support small business 43Tables1 Defining an

23、d measuring fragility 32 Business life cycle:Opportunities and challenges 8Boxes1 No development without peace,no peace without development 42 The ITC Small Business in Fragility Survey 193 Defining competitiveness 304 Help business support organizations to help businesses 365 Market systems develop

24、ment in fragile contexts 47viSME COMPETITIVENESS OUTLOOK 2023Thought leadersOuided BouchamaouiNobel Peace Prize co-LaureateBusiness leadership in a time of transition15Sanda OjiamboExecutive Director and Chief Executive Officer United Nations Global CompactGood governance:Breaking the cycle of fragi

25、lity28Per L.SaxegaardExecutive Chair Business for Peace FoundationFostering resilience,hope and global collaboration for SMEs in fragile contexts39Business voicesSegundo OrdezFormer legal representative,La Cooperativa Nueva Esperanza del Pacfico,ColombiaSocial inclusion through market linkages9Aung

26、Khaing HtweManaging Director,Smile Happy Company,MyanmarBack to basics:transport,electricity and regulations21Nimo Ibrahim HassanDigital Freelancer and Secretary,Dadaab Collective Freelancing Agency,KenyaThe power of collectives34Ahmed A.KhalafDirector General,Beirut Erbil for Potato Products,IraqNa

27、vigating partnerships in stormy business waters44Daryna VoitanishekSales Manager,UApple (Sadyi Dnepra LLC),UkraineIn search of alternative export routes12Gilles CarbonnierVice-President International Committee of the Red CrossGenerating livelihood opportunities in conflict and violent settings49SMAL

28、L BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHviiAcronyms Unless otherwise specified,all references to dollars($)are to United States dollars.ACLED Armed Conflict Location and Event DataBSO Business support organizationFCS Fragile and Conflict-Affected SituationsFSI Fragile States IndexGDP Gross

29、domestic productILO International Labour OrganizationITC International Trade CentreOECD Organisation for Economic Co-operation and DevelopmentSDG Sustainable Development GoalSMEs Small and medium-sized enterprises SMECS SME Competitiveness SurveyviiiSME COMPETITIVENESS OUTLOOK 2023AcknowledgementsTh

30、e ITC SME Competitiveness Outlook 2023 was prepared by a team led by Barbara Ramos,Chief of Research and Strategies for Exports,under the strategic direction of the ITC executive director,deputy executive director and senior management.Valentina Rollo coordinated the report.The writing team in the R

31、esearch and Strategies for Exports Section included Floriana Borino,Barbara Ramos,Nathalie Raschka,Valentina Rollo and Khadija Zaidi.Flavia Cifarelli,Ruat Cira,Jack Gregory,Aishwarya Nahata,and Teny Nebie provided research and analysis assistance.We thank Tilman Brck,Neil Ferguson,Wim Naud,Lame Ungw

32、ang and Mark Van Dorp for their expert advice and significant contributions during the drafting process.We also acknowledge all ITC colleagues who provided substantive comments and contributions to the report,in particular Ben Beuchel,Eric Buchot,Anne Chappaz,Flavia Cifarelli,Seyram Daddy,Emilie Dai

33、ron,Nicolas Escobar Parra,Linn Maung Maung,Jakub Michalak,Lilia Naas,Ky Phong Nguyen,Peter Moi Ramba,Charles Roberge,Fiona Shera,Sacha Silva,Hanna Syrchyna and Armen Zargaryan.The ITC Small Business in Fragility Survey,coordinated by Valentina Rollo,was designed,translated and implemented by Florian

34、a Borino,Ruat Cira,Olga Khomula,Olha Krylova,Sarah Mohan,Teny Nebie,Antonina Popova,Nathalie Raschka and Valeria Tiffer(all ITC).The survey was disseminated through the ITC Strengthening the Agriculture and Agri-Food Value Chain and Improving Trade Policy project in Iraq(thanks to Eric Buchot,Ting H

35、an,Ky Phong Nguyen,Peter Moi Ramba,Karla Solis Ruiz,and Zahraa Witwit),Image Diplomacy in Myanmar and the Norwegian Refugee Council teams in Burkina Faso,Colombia,Honduras,Kenya,South Sudan and Ukraine,coordinated by Knut Andersen of the Global Program Section.We deeply appreciate the time and trust

36、 of the business owners and managers who have shared their experiences with us.We appreciate the personal contribution of distinguished Thought Leaders:Ouided Bouchamaoui,Gilles Carbonnier,Sanda Ojiambo and Per Saxegaard.We also acknowledge the special significance of our Business Voices:Aung Khaing

37、 Htwe of Smile Happy Company,Nimo Ibrahim Hassan of the Dadaab Collective Freelancing Agency,Ahmed Khalaf of Beirut Erbil for Potato Products,Segundo Ordez of La Cooperativa Nueva Esperanza del Pacfico and Daryna Voitanishek of UApple.The report benefited from the input and comments of Gilles Carbon

38、nier(International Committee of the Red Cross),Cyprien Fabre(Organisation for Economic Co-operation and Development),Sarah Logan(International Growth Centre),Jonathan Marley(Organisation for Economic Co-operation and Development),Kritika Saxena(University of Groningen)and Rita Sciarra(United Nations

39、 Development Programme).Natalie Domeisen and Anne Griffin managed editing and production.Julie Wolf served as lead editor,with editorial support by Jennifer Freedman.Cendrine Pechoux and Shakira Lakdawalla provided administrative support.Iva Stastny Brosig,Design Plus d.o.o.studio,led art direction

40、and layout.Kristina Golubic led graphic design.Serge Adeagbo provided digital printing services.Small Businesses in Fragility:From Survival to Growth xSME COMPETITIVENESS OUTLOOK 2023Over the past few years,the international landscape has shifted dramatically:more and more,conflicts are breaking out

41、 within and across countries,amid rising geopolitical tensions and intense economic upheaval.These conflicts are putting lives and livelihoods at risk,at a time when the world is still working to recover from the painful toll of the COVID-19 pandemic,while grappling with rising costs of living and a

42、 greater incidence of climate-related natural disasters.These crises are changing the entire fabric of communities and regions:they lead to greater fragility,and therefore risk the achievement of the Sustainable Development Goals,such as ending hunger,improving food security,transitioning to more su

43、stainable modes of consumption and production,enabling decent work and economic growth,and ending gender inequality,to name a few.One person out of every eight currently lives in a fragile situation,and that number includes most of the worlds poorest.For smaller businesses,trying to surviveand thriv

44、ein fragile and conflict-affected settings is exceedingly difficult.For these businesses,fragility means facing far greater start-up costs and limited capacity and resources for innovation.It means facing a greater risk Foreword Antoine Tardy/ITCof failing outright.It means facing an even greater li

45、kelihood of the surrounding community experiencing poverty,and of people turning to self-employment to provide for themselves and their families.These businesses are the International Trade Centres core constituency,and the most important lesson we have learned over nearly 60 years of serving them i

46、s that we cannot achieve sustainable,inclusive development unless these small businesses are able to thrive in the global economy.Fragility manifests in different ways,while businesses also experience fragility differently.For instance,findings from our ITC Small Business in Fragility Survey,which w

47、e present in this report,affirm that small,informal,youth,and women-led firms often experience harsher repercussions from fragility than their larger,formal,older,and men-led counterparts,respectively.These nuances matter:what works well in one context can backfire when tried somewhere else.We canno

48、t have a one-size-fits-all approach,but that does not mean that we cannot identify some best practices that can help.Fragility requires a two-pronged approach,one where both firms and governments have critical roles to play.The states in which these entrepreneurs live and work can help by creating a

49、n environment where these enterprises have the infrastructure they need,are not burdened by excessive red tape,and are in an economy with clear and consistent rules and modes of operating.In parallel,small businesses can learn to adapt to changing circumstances,forge deeper relationships with partne

50、rs,and adopt new ways of working that make them more competitive both locally and internationally.These are efforts that need to happen in tandem:collaboration between everyone involved,from local governments and the private sector to international agencies and development partners,is critical to ma

51、king sure that this two-pronged approach leads to lasting,positive change.To make a real difference,and in the right direction,also means developing a clear understanding of the repercussions that different SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHxiactions have in fragile and conflict-a

52、ffected settings.We must all,always,proceed based on that time-honoured injunction:first do no harm.Increasingly,our own work at ITC takes place in fragile settings,as the micro,small,and medium-sized enterprises that we collaborate with are often in areas affected directly or indirectly by conflict

53、 and other crises.That is why we have dedicated this years edition of our flagship publication,the SME Competitiveness Outlook,to what fragility means for small businesses,along with the role that businesses and states can play in mitigating fragility.It is also why we are adapting our own mode of w

54、orking to make sure that our efforts on the ground and in policy circles can help small businesses and states address the root causes of this fragility,rather than allowing fragility to flourish.As we approach our own 60th anniversary as an institution,and with precious time remaining to achieve the

55、 Sustainable Development Goals,we are facing a critical juncture in our efforts to avert the worst of climate changes impacts,to achieve a gender-equitable world,and to make poverty and hunger a thing of the past.This year marked the halfway point of the 2030 Agenda for Sustainable Development,and i

56、n December 2023 the first Global Stocktake under the Paris Agreement on climate change will conclude at the United Nations climate conference in Dubai.What we have already heard at this years SDG Summit and from synthesis reports circulated under the Global Stocktake have affirmed that we have far m

57、ore work to do to achieve a more sustainable,inclusive,and fairer world,both for current generations and those yet to come.Moreover,our research shows that fragility and conflict-affected states are among those struggling the most to deliver on the SDGsmeaning that the only way to realize this ambit

58、ious development agenda globally is by devoting far greater efforts to these settings.The International Trade Centre stands ready to scale up our own efforts,ambition and commitment to closing the gap between the present we have and the future we need.This report aims to help us deliver on that comm

59、itment,and we hope it provides our partners with a better understanding of what fragility and conflict mean for small businesses,states,and sustainable development.Pamela Coke-HamiltonExecutive Director International Trade Centre xiiSME COMPETITIVENESS OUTLOOK 2023 Fragility is the failure of the st

60、ate to perform basic functionsFragilityis persistent and increasing,hampering the Sustainable Development GoalsFragility is multilevel and multidimensionalShare of firms experiencing high fragility 18%32%31%31%34%41%41%36%SizeFormalityGenderAgeFirms characteristics matterMore small,informal,women-le

61、d and youth-led companies experience high fragilitylargeformalmen-ownednon-youth-ledMSMEsinformalwomen-ownedyouth-led29%38%29%35%political violenceShare of firms experiencing high fragility in regions with:31%34%incomeinequality Location mattersViolent,poor and unequal regions have more companies ex

62、periencing high fragilityhighlowlowhighhighlownationalregionalindividuals and businesses security pillar economic pillarsocial pillarFragility varies across levelsand along three dimensionsMajor challenges to meet SDG 1-No poverty80%FCS 20%non-FCSless than vsNumber of countries classified as Fragile

63、 and Conflict-affected Situations(FCS)by the World Bank19 new countries:Fell into fragility15 countries:Escaped fragility20 countries:Remainedfragile and conflict-affected201535200620 19 392022SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHxiiiCOMPETITIVENESS Higher competitiveness is associat

64、ed with lower experienced fragilityWhat firms do mattersCompetitiveness helps firms cope with fragility Small Businesses:From survival to growthPerceived fragility can be reduced 25%by putting in place internal measures to raise firm competitiveness score by 40 points As fragility worsens,firm-level

65、 actions no longer protect firms from state-level fragility.There is a window of opportunity in which firm-level support can yield positive outcomes,before fragility and violence engulf firms and their business ecosystem entirely.More fragile countriesITC Competitiveness ScoreITC Fragility Exposure

66、IndexSecure peace as a basis for reforms.Rebuild institutional capacity for economic reforms.Stakeholders must:coordinate to lessen risks collaborate to tackle multiple challenges understand the context to do no harmStrengthen ability to operate,build networks and adapt to sudden market changes.ITC

67、Competitiveness ScoreITC Fragility Exposure Index40 points25%difference in perceivedfragility20283760Reduce experienced fragility with actions to support business growth:Competitiveness is not a silver bulletEngaged with Business Support Organizations(BSOs)14%35%noyesKeeping financial records21%42%s

68、hare of respondents reporting employment growth(%)yesnoWith strong hiring practices31%41%noyesFirm capacityLOWHIGHState capacityLOWHIGHFIRM CAPACITYSTATE CAPACITYSupported modeSurvival modeGrowth modeResilientmodeSmallbusinessxivSME COMPETITIVENESS OUTLOOK 2023Small business in a more fragile worldT

69、he world is grappling with unprecedented crises.The quadruple shock of COVID-19,conflict,climate change and higher cost of living threatens to push countries into greater insecurity,economic instability and social upheaval.As many places struggle to cope with these shocks,the world risks becoming mo

70、re fragile.As the types of crises that trigger fragility hit new places,others have found themselves trapped for years.The World Bank currently classifies 39 countries and territories as fragile or conflict-affected,up from 35 in 2006.A look behind the figures is telling of the 35 countries affected

71、 by fragility or conflict in 2006,only 15 have since managed to break out of fragility,while 19 others have fallen into it.Rising fragility hampers peoples ability to lead peaceful and prosperous lives.In 2021,nearly a billion people lived in fragile settings,with more than 300 million in extreme po

72、verty.As crises push more places into fragility,86%of the worlds poor could be living in countries classified as fragile by 2030.Also,instability increasingly spills across borders.In 1991,only 4%of civil wars involved foreign forces.By 2021,the number had risen twelvefold to 48%.Moreover,the number

73、 of people forced to flee their homes,some to neighbouring countries and beyond,has doubled in the past decade,to roughly 100 million.Breaking the cycle of fragility requires addressing the factors that drive it.Because it often coexists with and is reinforced by factors such as poverty and conflict

74、,Executive Summary How this report defines and measures fragilityThis report focuses on the impact of conflict-driven fragility on the competitiveness and growth of micro,small and medium-sized businesses.Why conflict?Conflict has persisted as one of the key factors driving fragility,with the term f

75、ragile and conflict-affected contexts commonly used.While fragility can result from different events,including conflict,pandemics and climate change,each poses particular challenges to countries and businesses,necessitating a dedicated analysis to arrive at specific recommendations.Why businesses?Ju

76、st as fragility varies from country to country,its impacts may also differ from region to region within a country,and from firm to firm within a region.Understanding fragility from a business perspective,and particularly from that of the small businesses that constitute about 90%of all firms in frag

77、ile and conflict-affected settings,is necessary to complement macro-level analysis and put in place effective support strategies.The analysis in this report is based on novel data gathered by the International Trade Centre to assess the experience of small businesses in fragile and conflict-affected

78、 settings.The Small Business in Fragility Survey collected information on two aspects of fragility.One set of questions helped identify the level and structure of fragility to which firms are exposed individually,which was used to build an index.Another set of questions assessed the extent to which

79、fragility,as experienced by the firms,influences the obstacles they report.This helps to link the index to actual business outcomes.The Small Business in Fragility Survey covered eight countries Burkina Faso,Colombia,Honduras,Iraq,Kenya,Myanmar,South Sudan and Ukraine.In six countries Burkina Faso,C

80、olombia,Iraq,Kenya,Myanmar and South Sudan the survey covered a random sample of companies whose competitiveness ITC had previously assessed through its SME Competitiveness Survey(SMECS).This allowed responses to be combined,providing insights on whether competitiveness factors were associated with

81、the firms experience of fragility.ITC had not previously interviewed any of the firms in Ukraine and Honduras.In total,there were interviews with 1,323 firms,out of which 1,095 participated in both the SMECS and the Small Business in Fragility Survey.SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GR

82、OWTHxvisolating the drivers and outcomes is a challenge.Various definitions and measurements have been proposed,with the most common ones portraying fragility as a macro-level phenomenon that hampers the states ability to fulfil basic functions and cope with shocks.The impacts of fragility nonethele

83、ss trickle down.Fragility damages the business ecosystem and jeopardizes the ability of firms to compete,connect and change.By looking at fragility from a business perspective,this SME Competitiveness Outlook aims to promote actions that support enterprises to survive and grow,helping lay the founda

84、tions for long-lasting stability and sustainable,inclusive development.All firms hurt by fragilityStability requires strong foundations.This includes an active civil society and a vibrant private sector that provides the decent jobs,goods and services needed to increase incomes and meet societal nee

85、ds,today and tomorrow.In fragile and conflict-affected places,small and medium-sized enterprises(SMEs)often play this critical role.In fragile settings,micro,small and medium-sized enterprises comprise 90%of all businesses,with a stronger presence of smaller firms.With proper support,they have great

86、er chances of coping with fragility,helping sustain the livelihoods of millions.If they are set on a growth trajectory,they are more likely to take off once stability starts taking hold and the business environment begins to improve.In fact,many have observed a so-called Phoenix effect or a sharp up

87、turn in entrepreneurial rates as surviving firms rebound after peace and stability are secured.Making small business survival a priority in fragile situations,while laying the foundations for firm growth,is essential in leveraging economic opportunities during peaceful times.Providing a secure envir

88、onment for legitimate businesses to operate,while deterring companies from exploiting fragile situations,can support the transition from conflict and help sustain long-term stability.44%61%34%29%22%10%Non-FCSFCSShare of firms(%)SmallMedium-sizedLarge0102030405060708090100More businesses are small So

89、urce:ITC,based on World Bank Enterprise Surveys and Fragile and Conflict-Affected Situations(FCS)list.The business life cycle:Opportunities and challengesSource:ITC,adapted from Brck et al.,2013.Misallocation of entrepreneurial talentMore firms created out of necessityLower formalizationConstrained

90、or regressive innovationStunted growthLower exportsBrain drain and firm flightHigher failure ratesLarge pool of latent entrepreneursHigher creation rates,though informalBenefits for connected or protected firmsDiaspora remittances and investment Serial entrepreneurshipConceptualizationBusiness Phase

91、:Start-upGrowthInternationalizationExitChallengeOpportunityxviSME COMPETITIVENESS OUTLOOK 2023Fragility constrains business in ways that are fundamentally distinct from non-fragile settings.Production and consumption become distorted,investment goes down and growth is stunted.This trickles down to t

92、he business ecosystem,depressing business dynamics across all stages of a firms life cycle.Despite business opportunities at each stage,challenges abound.Consequently,the net impact of fragility and conflict on entrepreneurship particularly the kind that promotes growth and stability tends to be neg

93、ative.For emerging entrepreneurs,starting a formal business is difficult and costly.In fragile contexts uncertainty heightens costs,and institutions responsible for basic start-up procedures,such as property registration and contract enforcement,are undermined or inefficient.Starting a business in f

94、ragile settings costs twice the world average and more than 15 times than in high-income countries.Pervasive market failures in fragile settings make it harder to start a business and make it grow.Firms hoping to formalize and grow are deterred by the excessive cost and time.This is exacerbated by t

95、he fact that firms in fragile settings tend to invest little in innovation.Firms innovate to simplify business processes,such as by shortening supply chains or finding customers closer to home.While such actions help them adapt to the circumstances and survive,they often do not lead to firm growth.S

96、urvivalist entrepreneurship is also evident in the form of self-employment.Because informality is prevalent and salaried occupations are rare,self-employment becomes a coping mechanism.Between 2006 and 2020,around 70%of all employment in fragile and conflict-affected situations was self-employment,c

97、ompared with a world average slightly below 50%.Aspiring exporters face significant hurdles.Unstable or subpar infrastructure access;limited access to finance,exchange rate fluctuations and currency controls;and other deterrents reduce export opportunities.Unsurprisingly,ITC analysis shows that the

98、number of exporters decreases substantially as areas become more fragile.Business failure is also more common than in settings that are not fragile and affected by conflict.Smaller and newer ventures have less experience and fewer resources than established firms,leading to higher exit rates as frag

99、ility grows.Yet firms that survive tend to see a rebound in economic opportunities once peace starts to take hold,highlighting the need to maintain business support during fragility and conflict.Fragility Exposure Index:Measuring the business impactWhile much attention has been given to measuring an

100、d addressing fragility at the macro(state)level,exposure and impacts differ at the micro(business)level.To assess how different businesses experience the same overarching level of fragility,ITC constructed a Fragility Exposure Index based on survey data from firms in eight countries.The index shows

101、that firms are exposed to different dimensions of fragility,and are affected to different degrees depending on business characteristics such as location,size and type of ownership,as well as the firms own capabilities and actions.Fragility can reach firms through security,economic and social channel

102、s.For example,if fragility is characterized by higher criminality,a larger firm that can afford private security is likely to be less affected than smaller businesses without such resources though this may come at the expense of other,more productive investments.To reflect these nuances,the index wa

103、s built around three pillars:Security:measures the impact of insecurity and violence on businesses Economic:measures the impact on firms economic performance and opportunities Social:measures the impact on company relationships,reflected in trust in people,networks,business support organizations(BSO

104、s)and local and national institutionsIn addition to the structure of fragility,business location matters.Firms in conflict hotbeds,in poorer areas,and regions where inequality is more marked often experience fragility more intensively.Businesses in violent,poor and unequal regions more affected Sour

105、ce:ITC,based on ITC Small Business in Fragility Survey and Subnational Human Development Index Database of the Global Data Lab.29%38%29%35%Regions with:Political violence31%34%IncomeInequalityhighlowlowhighhighlowShare of firms experiencing high fragility(%)SMALL BUSINESSES IN FRAGILITY:FROM SURVIVA

106、L TO GROWTHxviiFirms with certain characteristics are also more exposed and affected.Among those surveyed by ITC,smaller firms were more likely to report more intense experiences of fragility:34%of micro,small and medium-sized companies reported experiencing high levels of fragility,compared with 18

107、%of large firms.Informality further exacerbates the effects of fragility.Informal firms were almost 10 percentage points more likely to report experiencing fragility intensively than formally registered ones.This is partly because informal firms tend to have little or no recourse to formalized credi

108、t and are largely excluded from institutions that can provide the services they need to survive.Women-led firms tend to be at a disadvantage even in non-fragile settings.Businesses owned and led by women generally have less access to public infrastructure services,finance and social protection.In fr

109、agile settings,additional factors such as womens increased exposure to violence and unsupportive social norms make them even more vulnerable.Youth-led companies also report experiencing higher levels of fragility than non-youth-led companies.In fragile settings,youth-led enterprises are more likely

110、to tread cautiously,focusing on consolidating operations and avoiding risk-taking.Identifying which firms are likely to be more exposed to the security,economic and social challenges related to fragility is useful to design tailored support programmes.However,it is necessary to go beyond what and wh

111、ere firms are and identify what they can do to increase their ability to cope with fragility.Businesses can act to curb impact of fragilityBuilding competitiveness can serve as a buffer to the impacts of fragility.When firms act to improve their competitiveness,they are likely to lower their exposur

112、e.For instance,by putting in place internal measures to raise its competitiveness score from 20 points(at the low end of the competitiveness distribution)to the average of 60 points,a firms experienced fragility can drop by more than 25%,with no other changes taking place at the business ecosystem o

113、r national level.At the micro level,competitiveness is based on a firms business processes(ability to compete);internal and external connections(ability to connect);and responsiveness(ability to change).These capabilities provide a solid foundation for business resilience.Firms with critical competi

114、tiveness characteristics tend to fare better during crises.ITC has pinpointed three firm-level actions that partially compensate for what is lacking in the environment of fragile and conflict-affected areas:Build trustworthy connections Improve financial management Identify and retain skilled staffC

115、ompetitiveness is associated with lower experienced fragilitySource:ITC calculations,based on ITC SME Competitiveness and Fragility Surveys of 1,095 firms in Burkina Faso,Colombia,Iraq,Kenya,Myanmar and South Sudan.See Annex I for detail.ITC Competitiveness Score40 points25%difference in perceivedfr

116、agility20283760ITC Fragility Exposure IndexSmall,informal,women-owned and youth-led firms intensively affected by fragility Source:ITC,based on ITC Small Business in Fragility Survey.18%32%31%31%34%41%41%36%SizeFormalityGenderAgelargeformalmen-ownednon-youth ledMSMEsinformalwomen-ownedyouth-ledShare

117、 of firms experiencing high fragility(%)xviiiSME COMPETITIVENESS OUTLOOK 2023First,companies engaged with business support organizations as well as peers,buyers and suppliers were more likely to report no revenue losses,compared with companies not engaged.What is more promising,firms engaged with BS

118、Os were more than 20 percentage points more likely to hire employees a positive sign of growth than companies without such connections.In fragile contexts,BSOs can act as a bridge among businesses and between firms and official institutions.They can enable businesses to create connections and share

119、information to help them cope.Unfortunately,access to such institutions may be restricted for many businesses,and the quality of the services provided may also suffer due to limited funding and skewed priorities.Second,businesses that manage resources well are stronger candidates for funding.Even if

120、 external funding is limited,companies with a good grip on their finances are better suited to identify internal buffers and continue operating in periods of disruption.Firms with strong internal financial management mechanisms were less likely to experience fragility intensively,according to ITC su

121、rveys.Companies that keep full economic records were 21 percentage points less likely to have lost revenue and twice as likely to report employee growth.Finally,companies that rely on professional hiring processes to identify talent were more likely to weather the economic impacts of fragility.Forty

122、-eight percent of enterprises with an established hiring process reported no drop in revenues,compared with 36%of those with a weak hiring process.These businesses were also more likely to expand their labour force.A strong hiring process increases the likelihood of finding employees with the right

123、set of skills.This matters,as skilled workers are more efficient at adapting operations to new contexts,allowing firms to continue operating in periods of instability.Significantly,skilled employees are also more apt to innovate.In fragile settings,even innovation that is survival-driven and well be

124、hind the technology frontier,or frugal,is critical to ensure survival and power subsequent growth.Unfortunately,the analysis also shows that firms own actions can only help up to a certain level of fragility,and do not protect them from all manifestations of fragility.In fact,as fragility becomes wo

125、rse or more widespread,firm-level actions no longer protect firms to the same extent or at all.Competitiveness is not a silver bullet,of course.In less fragile countries,higher competitiveness is correlated with lower experienced fragility.This means that actions to increase competitiveness can less

126、en the exposure of companies to fragility.As the environment becomes more fragile,the relationship disappears.While firms actions do matter,factors in the national environment,over which individual companies have little influence,are as or more important in determining their competitiveness and expe

127、riences of fragility.Similarly,firm-level action appears to have little impact on how companies experience the security aspects of fragility.In other words,all enterprises seem to be exposed to the harm caused by fragility through security channels,regardless of how much they try to improve their Ke

128、ep financial records to fuel expansionSource:ITC calculations,based on ITC SME Competitiveness and Fragility Surveys of 1,095 firms in Burkina Faso,Colombia,Iraq,Kenya,Myanmar and South Sudan.See Annex I for detail.Keep full recordsEstablished hiring process14%35%yesno21%42%yesnoShare of firms with

129、employee growth(%)Formal hiring practices underpin firm growth Source:ITC calculations,based on ITC SME Competitiveness and Fragility Surveys of 1,095 firms in Burkina Faso,Colombia,Iraq,Kenya,Myanmar and South Sudan.See Annex I for detail.Established hiring process14%35%yesno21%42%yesno31%41%strong

130、weakShare of firms with employee growth(%)Share of firms with employee growth(%)Share of firms with employee growth(%)Work with business bodies to support growth Source:ITC calculations,based on ITC SME Competitiveness and Fragility Surveys of 1,095 firms in Burkina Faso,Colombia,Iraq,Kenya,Myanmar

131、and South Sudan.See Annex I for detail.Engaged with business support organizations14%35%yesnoShare of firms with employee growth(%)SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTHxixcompetitive position.In fact,there are situations in which more competitive and profitable firms become targets o

132、f extortion,corruption and other acts of violence.Two implications emerge from this analysis.First,there is a window of opportunity in which firm-level actions and support yield positive outcomes.This tends to be before fragility and violence completely engulf firms and their business ecosystem.It i

133、s thus necessary to deal directly with the overarching situation of fragility,strive to consolidate peace and rebuild the capacity of the state to sustain a supportive and stable environment.Second,interventions at firm level alone,even at lower levels of fragility,may not be sufficient to secure fi

134、rms survival and growth,and can even have negative effects if the underlying factors that drive fragility and conflict are not well understood and taken into account by those providing support.Addressing fragility:A two-pronged approachWhere crises are increasingly protracted and fragility tends to

135、persist,interventions at the macro and micro levels must go together.It is fundamental to address the factors that drive fragility and restore the ability of the state and business ecosystem to perform their functions and cope with risks.But it is also critical to strengthen the capacity of firms to

136、 cope with the prevailing state of fragility and provide them with the right environment to move beyond survival,laying stronger foundations for growth and a more stable future.Building state capacity includes reforms involving the business environment that remove barriers to entry and operation rel

137、iable infrastructure and related services,fewer procedural complexities and better economic governance.Here,the goal should be to create a supportive business environment,in which entrepreneurs can thrive and grow in both size and number.Building firm capacity or increasing firm competitiveness requ

138、ires enhancing their ability to operate in the day-to-day environment,build strong connections with actors in the business ecosystem and adapt to sudden market changes.This allows them to become more resilient to the many shocks that fragility engenders.Source:ITC.Firm capacityLOWHIGHState capacityL

139、OWHIGHSupported modeSurvival modeGrowth modeResilient modeSmallbusinessCompetitiveness is not a silver bulletSource:ITC calculations,based on ITC SME Competitiveness and Fragility Surveys of 1,095 firms in Burkina Faso,Colombia,Iraq,Kenya,Myanmar and South Sudan.See Annex I for detail.26283032343638

140、26283032343638304050607080Less fragile countriesITC Fragility Exposure IndexITC Competitiveness ScoreITC Fragility Exposure IndexITC Competitiveness Score20406080100More fragile countries2628303234363826283032343638ITC Fragility Exposure IndexITC Competitiveness ScorexxSME COMPETITIVENESS OUTLOOK 20

141、23Addressing both state and firm capacity in tandem is the key to promoting growth,in addition to avoiding some risks.If support is only to firms,interventions may have little to no impact,depending on the overarching level of fragility.Additionally,powerful firms in weak states may deliberately eng

142、age in destructive or unproductive activities.Similarly,enhancing state capacity in the absence of a strong private sector is likely to be short-lived,as exemplified by the numerous countries cycling through periods of fragility and stability.Overcoming fragility is a multistakeholder process.By wor

143、king collaboratively through strategic partnerships where the value added by each stakeholder is clear,it is possible to address a broad range of macro,meso and micro issues that hinder the growth of small businesses.Still,a one-size-fits-all approach is not the answer.SMEs have both the ability to

144、foster peace and to enhance conflict.In many post-conflict contexts,private-sector actors contribute to greater rather than lower fragility,exacerbating inequality and inter-group resentment.Any intervention must be grounded in a deep understanding of the environment,and the firms operating within i

145、t,to minimize negative outcomes and maximize the chances of success.THE VICIOUS CYCLE OF FRAGILITYCHAPTER SUMMARYWhat is fragility,and how extensive is it?How does it affect business performance?How do businesses cope,depending on the stage of their business?This first chapter explores these questio

146、ns.Fragility hampers the states ability to perform basic functions and cope with shocks,damaging the business ecosystem.It jeopardizes the capacity of firms to compete,connect and change throughout their life cycle.The costs of fragility and conflict in misallocated,displaced and disrupted business

147、dynamics can be substantial,especially if entrepreneurial talent shifts towards unproductive or destructive activities.Yet we can encourage actions that promote positive,opportunity-creating enterprises and growth-enhancing entrepreneurship,rather than negative activities and survivalist strategies.

148、These high-growth and innovative businesses can lay the foundations for long-lasting stability and sustainable,inclusive development.The world is grappling with unprecedented crises.The quadruple shock of COVID-19,conflict,climate change and higher cost of living threatens to push countries into gre

149、ater insecurity,economic decline and social upheaval.As many places struggle to cope with these shocks,the world risks becoming more fragile.The causes of fragility are many,multidimensional and often self-reinforcing.Breaking the cycle of fragility requires addressing the factors that drive it and

150、the way they interact.This is a long-term process involving various actors and coordinated interventions to develop the structural conditions,attitudes and behaviours that lead to peaceful,stable and prosperous societies.1But laying the ground for a stable tomorrow starts with actions today.Ensuring

151、 that the most vulnerable,including businesses,are protected from the pernicious effects of fragility is not only a matter of survival,but also an investment in the future.Small businesses operating in fragile and conflict-affected places can provide some of the jobs,goods and services needed to inc

152、rease incomes and meet basic societal needs.With proper support,they have greater chances of coping with fragility,helping sustain the livelihoods of millions.CHAPTER 1The vicious cycle of fragility SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH1Moreover,if they are set on a growth trajectory

153、,they are more likely to take off once peace takes hold and the business environment starts to improve.In fact,many have observed a so-called Phoenix effect,2 or a sharp upturn in entrepreneurial rates,as firms that have managed to cope rebound when peace is established.Therefore,putting a high prio

154、rity on business survival during fragility and conflict is crucial to leveraging economic opportunities later.This,in turn,can help sustain long-term stability.3Despite their prevalence,small businesses are often underserved in fragile and conflict-affected settings.4 To strengthen their ability to

155、contribute to a more stable future,it is necessary to understand fragility and how it shapes their opportunities,operations and outcomes.There is also a need to identify how entrepreneurial talent evolves,because businesses do not stand still in the face of fragility.They have agency,and through the

156、ir actions they can either reduce or reinforce their exposure to fragility and conflict,as well as the factors that drive them.Fragility is partially due to the failure of the state to fulfil basic functions.As a result,fragility is often considered a state-level phenomenon that constrains opportuni

157、ties,operations and outcomes in ways that are distinct from non-fragile settings.Yet not all fragility is similar,and not all firms are exposed to,and able to cope with it,in the same way.Fragility is multifaceted,and different types of firms are particularly exposed to some of its forms.Conversely,

158、firms can act to increase their ability to handle a given level and structure of fragility.Business responses to fragility and conflict tend to involve a mix of strategies that adapt over time to changing dynamics,circumstances and opportunities.This diversity of business responses lies along a spec

159、trum.At one end are fragility and conflict-sustaining activities,such as involvement in illicit trade and corruption.At the other,there are responses that directly or indirectly support the return to stability,such as providing social services.5 A firms experience of fragility and its ability to con

160、tribute to a more stable future are therefore defined not just by the states failure to fulfil basic functions and cope with risks,but also by the firms own exposure to,and ability to handle,those shortcomings in a positive way.This report aims to contribute by shedding light on these complex issues

161、.Chapter 1 provides a working definition of fragility and explores its impacts on economic and business performance.Chapter 2 uses new data collected by the International Trade Centre(ITC)to understand the multiple forms of fragility and how different enterprises are exposedFigure 1 State is term mo

162、st frequently associated with fragilitySource:ITC,based on the definitions of fragility used by international bodies.statesfragilestatefragilitysocialbasiccountriesconflictweakeconomicsecuritygovernmentservicesinstitutionalgovernanceperformanceinstitutionsworldlegitimacysituationspoorbankpopulations

163、politicalbroadcombinationfailedfailingcoredeliverypoliciespopulationterritoryprovisioncrisisvulnerabledevelopmentcapacitiesdisruptioncapacitycitizensdefinitionfunctionsassessmentservicemanagementresourcespowersubstantiallyqualityriskhumandimensionlegitimateunableunwillinglowvergerecoveringadequately

164、questionviolentuniquechallengesgeographicisolationinsecuritystatehoodlevelcollapse2SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYTable 1 Defining and measuring fragilityMeasurement or indexComponentsSourceFragile States Index Based on 12 risk indicators,grouped into four categories:c

165、ohesion and economic,political and social risks to state functioning.Fund for Peace6 Fragile and Conflict-Affected SituationsDefined as countries with the weakest institutional and policy environment,based on Country Policy and Institutional Assessment Scores,the presence of a United Nations Departm

166、ent of Peace Operation and/or flight across borders of 2,000 or more per 100,000 population.Separately,the World Bank lists countries in medium or high-intensity conflict.World Bank7 Fragile and Conflict-Affected States Similar,but not identical,to the World Banks FCS,focused on a Country Policy and

167、 Institutional Assessment score of less than 3.2 and/or the presence of a United Nations peacekeeping force in the past three years.International Monetary Fund8 Multidimensional Fragility FrameworkMeasured across six dimensions:economic,environmental,human,political,security and societal.Organisatio

168、n for Economic Co-operation and Development(OECD)9 Conflict Severity IndexBased on four indicators:deadliness,danger,diffusion and fragmentation.Armed Conflict Location&Event Data Project(ACLED)10 Note:The World Banks Country Policy and Institutional Assessment is computed annually for all its borro

169、wing countries.It includes 16 criteria,grouped into four clusters:economic management,structural policies,policies for social inclusion and equity,and public sector management and institutions.It ranges from 1(low)to 6(high).Source:ITC,based on the definitions of fragility used by referenced sources

170、.to and experience them.Chapter 3 identifies characteristics that can increase the capacity of a firm to cope productively with a certain level of fragility.Finally,Chapter 4 recommends actions to increase the capacity of the state to perform basic functions and that of the private sector to cope wi

171、th fragility in a manner that lays a strong foundation for stability and sustainable growth.A complex and persistent phenomenonFragility is neither linear nor one-directional the factors that drive it and its outcomes are often intertwined.Poorer countries are more at risk of becoming fragile,and fr

172、agility often leaves countries poorer.Conflict can make a place fragile,and fragility can breed violence and instability.This makes it difficult to define the phenomenon.It also makes it persistent,as the cycle of fragility,conflict and poverty can reinforce itself.One concept,many definitionsOne of

173、 the major challenges to promoting global economic and social development is to understand when places become fragile,in which dimensions they are fragile and why.11 But defining and measuring fragility is not straightforward,as illustrated by the multitude of indices used to examine it(Table 1).12F

174、ragility is traditionally understood as a state-level phenomenon.In fact,state is the term most frequently used to define fragility(Figure 1).The link is partly because the concept emerged from an earlier concern with failed states.The now defunct failed states indices are precursors of todays fragi

175、lity indices.In this context,high-capacity states are those able to provide public services,protect property rights and liberties,and with sole responsibility for handling violence and conflict.States with low capacity,in turn,have little or no shared societal identity and trust,an underdeveloped pr

176、ivate sector and little ability to handle shocks.These eventually translate into an environment conducive to instability and conflict(Box 1).13Despite these state-centric definitions,fragility can affect territories and areas within countries that would not necessarily be classified as fragile as a

177、whole.For instance,many conflicts are taking place in middle-income countries with relatively strong institutional capacity,affecting an increasingly larger share of the global population.This means that many of the findings and recommendations in this report can also help shape interventions at sub

178、national levels,even when the state generally retains legitimacy and the ability to provide for its people.Similarly,even in countries mired in conflict-driven fragility,there are de facto pockets of effectiveness,such as specific branches at municipal and district levels and quasi-state institution

179、s,that can be directly supported.SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH3Box 1:No development without peace,no peace without developmentMany definitions of fragility refer to countries where the government has lost the monopoly over violence and territorial control.Conflict is one of t

180、he primary drivers of fragility,with the terms fragile and conflict-affected situations often used together.Fragile situations are conflict-affected when they experience significant state-based or interethnic organized violence.In 2021,33 countries were involved in at least one conflict a number tha

181、t has increased considerably since World War II.In the same year,the World Bank classified 39 countries as fragile and conflict-affected situations.More and enduring conflicts Note:A conflict is counted if at least 25 deaths have occurred.The figure on the right illustrates the temporal evolution of

182、 conflicts with at least 1,000 battle-related deaths in any given year.Duration is calculated as the difference between the last year in which the conflict remained within the definitions threshold,and the first year in which the conflict reached 25 battle-related deaths,post-World War II.Source:ITC

183、 calculations,based on Uppsala Conflict Data Program/International Peace Research Institute Oslo Armed Conflict DatasetInstability is also spilling across borders.In 1991,only 4%of civil wars involved foreign forces.By 2021,the number had risen 12-fold to 48%.In addition,the number of people forced

184、to flee their homes,some to neighbouring countries and beyond,has doubled in the past decade,to roughly 100 million.The challenge to global development posed by conflict has thus become more acute,especially as many drag out over time,involving more countries and with more spillover effects.For thes

185、e reasons,the Doha Programme of Action 20222031 argues that there can be no sustainable development without peace and no peace without sustainable development.In line with this reasoning,this report focuses primarily on conflict and violence-driven fragility.Nonetheless,other elements contribute to

186、fragility.For instance,natural disasters induced by climate change can cause damage to infrastructure,disrupt food production and force people to move.Globally,some 24 million people were displaced by extreme weather in 2021 alone.These,in turn,have significant social and economic consequences that

187、can increase the risk of state failure.Note:The 2021 edition of the SME Competitiveness Outlook was dedicated to the topic of climate change and the challenges and opportunities for small businesses in going green.Source:OECD,2022;Reece,2017;Sherbinin et al.,2018;The Economist,2023.05101520253035401

188、9601970198019902000201020201960197019801990200020102020Countries involved in conflict(number)153302468101214161820Conflict duration(average number of years)4SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYOvercoming fragility takes timePlaces affected by fragility are often trapped in

189、a vicious cycle.The social fabric is typically fractured,and parts of society may regard the state as captured,which undermines its legitimacy.Because the state lacks legitimacy,citizens are less inclined to comply with rules and norms.Without such compliance,it becomes harder for the state to perfo

190、rm its functions properly.This,in turn,leads citizens to question the states legitimacy even more.A states failure to perform basic functions discourages the establishment of formal firms,as these face costs and uncertainties that shorten horizons and hamper investment.There are fewer employment opp

191、ortunities with an underdeveloped private sector,pushing people into self-employment and underemployment.Societies struggle with the demographic transition,constraining the opportunities for youth.14 This lays a fertile ground for crime and violence.An underdeveloped economy,limited economic opportu

192、nities,along with the lack of state legitimacy,expose the society to shocks that the state struggles to cushion due to its low capacity.This cycle entraps people in poverty and a sense of hopelessness.15Escaping this trap is possible,though not easy,and fragility tends to persist.Of the 35 states cl

193、assified as fragile by the World Bank in 2006,15 have since managed to break the cycle.Some of those that had moved out of fragility fell back again,however,and 19 countries that were not fragile in 2006 became so by 2022(Figure 2).Given these increasingly protracted crises and the persistence of fr

194、agility,interventions at the macro and micro levels must go together.Addressing the factors that drive fragility and restoring the ability of the state and business ecosystem to perform their functions,under minimally peaceful conditions,is fundamental.But it is also critical to strengthen the capac

195、ity of businesses to cope with the prevailing state of fragility and provide them with the right conditions to move beyond survival,prepare for and contribute to a more stable future.Trapped economies Fragility damages economic performance.Resources deteriorate as public expenditures are diverted to

196、 non-productive ends,ultimately affecting both production and consumption.Consequently,fragility and poverty often appear together,with countries affected by fragility lagging considerably in the drive to achieve the Sustainable Development Goals(SDGs).This development gap has profound consequences

197、for citizens and their ability to lead peaceful and prosperous lives.Distorted production and consumption Fragility hurts production and consumption.Production often declines because inputs capital,labour and land are not used effectively and efficiently.For instance,there is damage to infrastructur

198、e,services are disrupted,educational quality deteriorates and property rights are unenforced.Public investment in roads,telecoms,schools and other services is crucial to support entrepreneurial ventures.Figure 2 Fragility persists and growsSource:ITC,based on World Bank FCS list.051015202530354045Co

199、untries classified as FCS(number)Countries remaining fragile since 2006Countries becoming fragile since 2006Fragile countries per year34333230262424222122232424222320353534353632323536333535363637393920062007200820092010201120122013201420152016201720182019202020212022SMALL BUSINESSES IN FRAGILITY:FR

200、OM SURVIVAL TO GROWTH5Businesses need a baseline level of infrastructure and services to operate profitably.As public expenditures dwindle,the costs of starting and running a business increase.Producers may also dedicate more resources to the security of premises,staff and products.These obstacles r

201、educe expected profitability,discouraging formalization,hampering growth and triggering firm failures.16 Fragility is the textbook definition of a challenging business environment.Indicators confirm that firms in places affected by fragility and conflict face higher hurdles in key areas such as enfo

202、rcing contracts,obtaining credit,getting electricity and relying on public infrastructure for good logistics performance(Figure 3).All entrepreneurs featured as Business Voices in this report face or faced challenges associated with an unsupportive business environment.Participants in ITC programmes

203、 in Colombia,Kenya,Iraq,Myanmar and Ukraine alike report difficulties accessing electricity,transporting goods domestically and across borders,or relying on functioning state institutions to enforce contracts,albeit to varying degrees.In this environment,consumption also decreases.Incomes fall,asset

204、s deteriorate and savings rates increase,reflecting caution in the face of uncertainty.Lower production and consumption reduce opportunities for profitable ventures.This translates into further declines in entrepreneurship,fewer start-ups,less investment for innovation and firm growth,and eventually

205、 more entrepreneurial failures.In extreme cases,labour may be conscripted into military service or land and vehicles expropriated.Conflict also often causes governments to shift spending from civilian to military purposes.For instance,the share of military expenses as a percentage of government expe

206、nditures averaged 16%in fragile settings in 2015,compared with 6%for the whole world.17 As many fragile settings tend to be low-income,such a high share of resources dedicated to military ends comes at considerable economic and social expense.Poor and fragile:Two sides of the same coinFragility make

207、s the world poorer.Research suggests that global gross domestic product(GDP)would have been 12%higher in 2014 had there been no fragile and conflict-affected settings since 1970.This implies that fragility and conflict reduced GDP growth by an average of 0.9%per year.18 Fragile and conflict-affected

208、 countries also tend to have lower incomes,though middle-income countries are increasingly affected.Of the countries classified by the World Bank as fragile or conflict-affected in 2022,45%are low-income,37%lower-middle income and 18%upper-middle income(Figure 4).19 Fragility and poverty often reinf

209、orce each other.Nearly 1 billion people lived in fragile settings in 2021,with more than 300 million among them living in extreme poverty.20 As crises push more places into fragility,86%of the worlds poor could be living in countries considered fragile by 2030.21Figure 3 Business environment challen

210、ges aboundSource:ITC,based on World Bank Doing Business Indicators,Logistics Performance Index and FCS list.Enforcing contractsGetting creditGetting electricityLogistics performanceDoing business scoreLogistics performance index45.229.061.858.152.771.02.32.9FCSNon-FCSFigure 4 Fragility and low incom

211、e are connected Source:ITC,based on the Fund for Peace FSI,and World Bank World Development Indicators and FCS list.20406080100120Fragile States Index020,00040,00060,00080,000100,000GDP(constant 2015 USD)FCSNonFCS6SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYSDGs seemingly out of re

212、achThe SDGs embody a commitment by United Nations member states to achieve common aspirations towards peace,prosperity and environmental protection.22 Countries affected by fragility lag behind in achieving 15 of the 17 targets,with considerable gaps in some of them(Figure 5).Unsurprisingly,eradicat

213、ing poverty is profoundly difficult for most places affected by fragility.Nearly four out of five countries affected by fragility report major challenges in meeting SDG 1(No Poverty),compared with one in five non-fragile countries.What is worse,81%of countries classified as fragile by the World Bank

214、 either stagnated or regressed in ending poverty,23 partially due to the impact of COVID-19.24 Gender inequality is often pervasive in fragile contexts.Three of every four countries affected by fragility report major challenges in achieving SDG 5(Gender Equality),compared with less than one-quarter

215、of those not affected.In some fragile contexts,archaic norms and laws prevent women and other vulnerable groups from fully engaging in and benefiting from social and political processes.Climate change,another factor driving fragility,has further threatened progress in gender equality.In East Africa,

216、for instance,child marriages rose markedly in 2021 and 2022 across regions worst hit by drought,as dowries became a necessary source of income for families and communities.25 While fragile contexts tend to be disproportionately exposed to the impacts of climate change,including food insecurity,they

217、are not necessarily causing it.Two-thirds of countries affected by fragility reported achieving SDG 13(Climate Action),which is double the one-third of non-fragile countries.This positive achievement is little cause for celebration,however,as low emission levels largely reflect these countries under

218、developed economies.26 In fact,nine out of 10 countries affected by fragility report major challenges in achieving SDG 9(Industry,Innovation and Infrastructure),compared with three out of 10 of those not affected.As countries transition out of fragility and reinforce their productive capacities,doin

219、g so in an environmentally sustainable manner and that facilitates adaptation to climate change will be crucial.To achieve the SDGs globally,it is necessary to focus considerable effort on fragile contexts.Systematically and holistically improving peace,justice and strengthening institutions,as call

220、ed for in SDG 16,can vastly reduce the main causes of fragility and support the drive to implement the SDGs.Figure 5 Fragility hampers SDGsSource:ITC,based on 2022 Sustainable Development report data and World Bank FCS list.1878237533893235194191146225211126306354273132926172874127661Non-FCSFCSNon-F

221、CSFCSNon-FCSFCSNon-FCSFCSNon-FCSFCSShare of countries(%)Major challengesSignificant challengesChallenges remainGoal achieved0102030405060708090100SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH7Businesses:Surviving,not thrivingFragility affects not only economic performance,but also business d

222、ynamics.It does so across the life cycle of a firm from conceptualization through growth and even to its eventual demise(Table 2).While each phase offers some business opportunities,challenges abound,and the net impact of fragility and conflict on entrepreneurship at least the kind that promotes sta

223、bility and growth is negative.Misallocated talent,a missed opportunityEntrepreneurship can be productive,unproductive or destructive.27 Productive entrepreneurs create jobs,abide by laws and solve problems.Unproductive entrepreneurship can occur when talent seeks to evade authorities,unfairly influe

224、nce regulatory processes or manipulate policies to increase profits.28 At the other end of the spectrum is destructive entrepreneurship,or talent that moves into predatory and illegal activities,such as theft,smuggling and illicit trade,or outright state capture.29 Employment opportunities are limit

225、ed in fragile and conflict-affected settings.This means the pool of latent entrepreneurs is larger.It matters how these potential entrepreneurs allocate their talents because small businesses in conflict settings can collectively foster peace or enhance conflict.30 As illustrated in the Business Voi

226、ce of Segundo Ordez,from La Cooperativa Nueva Esperanza del Pacfico in Colombia,ensuring that all potential entrepreneurs have an opportunity to contribute positively is vital for social inclusion and economic growth,which can ultimately help sustain stability and peace.Productive entrepreneurship m

227、ay leverage opportunities created by the fragile and conflict situation.Social enterprises,for instance,can fill in gaps in public services such as education,healthcare and transport.Some provide security services or repair damaged infrastructure.When successful,these companies improve the local bus

228、iness ecosystem for all firms.However,unproductive or destructive entrepreneurs may unintentionally or deliberately obstruct pathways out of fragility because they benefit from it.31 Through illegal or predatory activities,such as illicit drugs or mineral trading,they increase their wealth and power

229、 for private benefit,rather than benefiting society.Additionally,these businesses may accumulate resources that they can leverage to maintain their power once overt conflict has ended.32Identifying and assessing the structures and institutions that spur talent and entrepreneurial effort,while comple

230、x,helps to illuminate the causes of fragility and how they relate to business dynamics.It can also point the way to solutions that avoid or reduce periods of fragility.33Self-employment,a survival strategy In most places affected by fragility and conflict,starting a formal business is burdensome and

231、 costly.Institutions that issue construction permits,register property,attract and protect investors,and enforce contracts are inefficient or non-existent.Firms in fragile and conflict-affected places Table 2 Business life cycle:Opportunities and challenges Source:ITC,adapted from Brck et al.,2013.M

232、isallocation of entrepreneurial talentMore firms created out of necessityLower formalizationConstrained or regressive innovationStunted growthLower exportsBrain drain and firm flightHigher failure ratesLarge pool of latent entrepreneursHigher creation rates,though informalBenefits for connected or p

233、rotected firmsDiaspora remittances and investment Serial entrepreneurshipConceptualizationBusiness Phase:Start-upGrowthInternationalizationExitChallengeOpportunity8SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYSegundo Ordez Former legal representative,La Cooperativa Nueva Esperanza d

234、el Pacfico,Colombia Social inclusion through market linkagesAfter decades of conflict,a peace agreement was signed in 2016 between the Government of Juan Manuel Santos and the Revolutionary Armed Forces of Colombia.The signatories pledged to return to civilian life,and many have become smallholder f

235、armers.La Cooperativa Nueva Esperanza del Pacfico,specialized in coconut and cocoa production,was formed by 33 ex-combatants.Coconuts and cocoa are very common in our region and have good market potential.This is why many of us,signatories to the peace agreement,decided to grow and sell them.But we

236、did not do it on our own we started a cooperative to support one another.In the beginning,we had no experience running a business,did not know who our customers would be and how to make a profit.We were forced to rely on intermediaries and incurred high losses,from which we have not yet fully recove

237、red.In the last four years,however,we have made great progress,partially thanks to ITCs Colombia PUEDE project.The project supported us in establishing a cocoa and coconut collection centre and provided advice in setting up a drying tunnel for cocoa,which helped improve the quality of our beans.We w

238、ere also able to formalize the structure of the cooperative,establishing roles such as information manager and a sales committee.These efforts led to a contract with AOL Colombia,a fruit and vegetable seller,which committed to buying 10 tons of coconuts every month.Certainly,signing the peace agreem

239、ent has been very positive for us.Things have changed for the better we have a more relaxed and enjoyable life and get to spend more time with our families.We interact with institutions and exchange knowledge without being afraid or suspicious.Still,things have not been easy.As a cooperative of ex-c

240、ombatants,we have received some,but limited,financial support from the Government,in the form of a basic income.Meanwhile,obtaining credit from banks has not been an option.Financial institutions have very stringent requirements,which most of us are not able to meet,having been outside of the market

241、 for an extended period.Recently,we have also been hit by challenges outside our control.We are currently not growing coconuts because of a coconut tree disease in our region.We are also struggling to distribute our produce to the rest of the country due to the closure of the Pan-American Highway be

242、cause of a landslide.But we remain optimistic we have the skills and knowledge to face these obstacles and come back stronger.ITCs project Paz y Unidad a travs del Desarrollo Productivo y el Comercio(Colombia PUEDE)was funded by the European Union.It worked to improve earning opportunities of 2,000

243、smallholder farmers and their families in Colombia by increasing productivity,improving quality and strengthening market competitiveness.BUSINESS VOICE ITCSMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH9must comply with nine different procedures on average to start a business the most in the w

244、orld.Additionally,the cost is twice as high as the world average,and more than 15 times the cost in high-income countries,calculated as a percentage of gross national income(Figure 6).Given the cost and time needed to start a business formally,most remain informal.In fragile settings,new business de

245、nsity rates,which measure the creation of start-ups in the formal sector,are significantly lower than in non-fragile settings(Figure 7).A large presence of informal firms tends to hold back growth,create unfair competition and erode formal firms market share.34 Moreover,empirical evidence shows that

246、 the labour productivity of informal firms is about one-fourth that of formal firms.35With greater informality,salaried occupations are limited and self-employment becomes a way of coping.36 Between 2006 and 2020,about 70%of all employment in fragile and conflict-affected areas was self-employment,c

247、ompared with a global average of slightly below 50%.This partially reflects lack of opportunity,and self-employment motivated by necessity increases with the level of fragility(Figure 8).Figure 6 Starting up:Red tape,high costs Source:ITC,based on World Bank Development Indicators and FCS list.World

248、Middle-income Low-incomeHigh-incomeFCSProcedures to register a business(number)Cost to start a business(percentage of GNI per capita)5.9%95.8%9.06.48.88.68.0128.0%38.4%40.3%Figure 7 Formal business creation decreases with fragility Source:ITC,based on World Bank Development Indicators and Fund for P

249、eace FSI.02468New business density406080100Fragile States Index(FSI)Figure 8 Self-employment is high,mostly out of necessity Source:ITC,based on Fund for Peace FSI and the Global Entrepreneurship Monitor Adult Population Survey,International Labour Organization(ILO)and World Bank FCS list.0246820406

250、080100Fragile States Index(FSI)Total early-stage Entrepreneurial Activity(TEA)for reasons of necessity49.2%70.2%WorldFCSSelf-employmentPercentage of total employment(%)10SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYLack of funding and innovation stunt growthThe pervasive market fail

251、ures in fragile settings make it harder not only to start a business,but also to make it grow.Although SMEs account for most companies in all economies,they comprise 90%of businesses in fragile settings,compared with 78%in non-fragile contexts,with a strong prevalence of smaller firms(Figure 9).The

252、growth of firms is often hampered by their inability to innovate.While businesses in fragile and conflict-affected settings are nimble and adaptable,innovation is survival-driven and well behind the technology frontier.This kind of innovation,which economists call frugal,usually involves simplifying

253、 business processes to adapt to the circumstances,rather than introducing new products and services or adopting technologies that enhance productivity.More firms in fragile contexts introduce process innovations,but these do not necessarily translate into increased labour productivity or sales growt

254、h(Figure 10).Such frugal innovation includes using fewer inputs or inputs that are less reliable but cheaper and more available,shortening supply chains or finding customers closer to home.In contrast,innovation that enhances productivity paves the way for firms to reap future opportunities and gene

255、rates positive effects on the wider economy,or externalities.It requires investment,whether from government or private sources.In fragile and conflict-affected settings,government support declines or ceases in areas such as research and development and higher education,with expenditures diverted tow

256、ards non-productive ends,such as defence and security.Private investment is also critical for firms to turn good ideas into new products and services.Innovation is risky and reliant on investors willing to be patient.However,although many financial entities are active in fragile and conflict-affecte

257、d settings,their time horizons do not seem in line with the challenges of operating and investing in such contexts.37 Moreover,few investors seem to have adopted a conflict-sensitive approach,to ensure the resources they provide do not fuel fragility.38 In addition to a lack of investment and innova

258、tion that stunts growth,many firms deliberately pursue strategies that avoid growth.Their aim is to shelter themselves from some dynamics present in fragile and conflict-affected settings,such as bribery,extortion and other acts of violence,which more often target visibly successful firms.39 This is

259、 unfortunate,as whether a firm grows or merely copes has an impact on economic development,not the least because fast-growing enterprises contribute disproportionately to creating employment.Figure 9 More businesses are small Source:ITC,based on World Bank Enterprise Surveys and FCS list.Figure 10 I

260、nnovation is survival-driven Source:ITC,based on World Bank Enterprise Surveys and FCS list.Firms introducing a process innovationReal annual labour productivity growthReal annual sales growth38.6%-1.8%0.1%31.0%-4.8%2.7%Percentage change(%)Share of respondents(%)Percentage change(%)FCSNon-FCS44%61%3

261、4%29%22%10%Non-FCSFCSShare of firms(%)SmallMedium-sizedLarge0102030405060708090100SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH11Daryna Voitanishek Sales Manager,UApple (Sadyi Dnepra LLC),UkraineIn search of alternative export routes On 24 February 2022,the invasion of Ukraine disrupted live

262、s and business operations.UApple is an apple grower located in the Dnipropetrovsk region.It employs about 55 permanent staff and 150 seasonal workers,and exports to European and Gulf countries.The first few months following the invasion were very hard,as we did not know how to react.With time,we put

263、 in place emergency protocols to allow us to carry out our business.For instance,we bought beds,food and medicine so our employees could stay on company premises if needed.We also bought three generators to avoid production interruptions when we started experiencing blackouts and internet outages.Th

264、ough producing electricity with generators is three times more expensive than regular supply,we only had to rely on them in the winter months,when apple prices happened to be high.We were lucky.Currently,our main challenge is with logistics and transportation.We used to export our apples through Ukr

265、ainian ports,which is no longer possible.Now we are shipping through Romanian ports,which,although not much more expensive,takes an additional seven days.The delay is caused by long wait times at the UkraineRomania border,as many Ukrainian companies are using this alternative route.Our clients under

266、stand the obstacles we face,but we still make sure to clearly communicate how disruptions are expected to impact delivery.We have also adjusted our payment terms to minimize the risks clients face when buying from us.For instance,before the conflict,buyers would transfer the bulk of the payment when

267、 the truck left company premises.Today,this is risky,as they do not know what will happen while the truck is crossing the country.So,we allow them to transfer the largest share of the payment when the shipment has crossed into Romania.Though we now internalize risks,these measures were necessary to

268、ensure we retain our clients.And while it was difficult to grow our business in this environment,we still managed to acquire two new clients.In fact,ITC helped us attend a trade fair in Madrid,where we met one of them.This was a great success,because 30%of our exports,by value,now go to this company

269、.The Embassy of Sweden to Ukraine finances the project Ukraine:Linking SMEs in the fruits and vegetable sector to global and domestic markets and value chains.It aims to enhance the competitiveness and sustain exports by Ukrainian SMEs of fruits,vegetables,nuts and wine.These businesses receive supp

270、ort to produce goods that meet market requirements and to access new markets,particularly within the European Union.BUSINESS VOICE ITC12SME COMPETITIVENESS OUTLOOK 2023THE VICIOUS CYCLE OF FRAGILITYFewer exporters,concentrated marketsDoing business across borders is more complex and often riskier th

271、an operating at home.It also requires firms to be internationally competitive.As pervasive fragility and conflict undermine competitiveness,firms tend to put less of a priority on going international.Poor access to electricity,telecommunications and transport facilities in fragile contexts is a barr

272、ier to trade,reducing opportunities to export even among firms with potential to do so.40Corruption,both a symptom and a cause of fragility,also helps explain lower participation in cross-border trade.41 It tends to raise production and operational costs and reduce profits,discouraging firms from ex

273、porting.42 Nonetheless,corruption may increase the probability of firms exporting indirectly by selling domestically to an exporter.These indirect exporters tend to be relatively insulated from corruption,as they rely on intermediaries that learn how to circumvent red tape through repeated interacti

274、ons.43 Strengthening domestic value chains can therefore serve as a path for firms in fragile settings to engage,albeit indirectly,in international trade.Finally,companies that were previously connected to international markets may suddenly find their links severed.As illustrated by the Business Voi

275、ce of Daryna Voitanishek,Sales Manager at UApple in Ukraine,the conflict in the country has forced companies to look for alternative and often less favourable routes to export.Countries affected by fragility and conflict tend to have fewer exporters.44 As places become more fragile,the number of exp

276、orters decreases considerably,according to ITC analysis.This reduction is more pronounced in the earlier stages of fragility,as there are more exporters in the market in the first place(Figure 11).Comparing South Africa,Botswana and Cte dIvoire helps illustrate some of the effects fragility has on e

277、xporters dynamics.South Africa is classified as warning,according to the Fund for Peace.The country has reported about 25,000 exporters for a population of 60 million.Cte dIvoire,classified as high alert,has reported around 1,000 exporters for a population of 30 million.Despite Cte dIvoires populati

278、on being half that of South Africa,its number of exporters is only 4%of South Africas.45 Because South Africa is wealthier than Cte dIvoire,a higher level of GDP could explain this disparity.Nevertheless,further comparisons show that other factors are at play,including fragility.Botswana,like South

279、Africa,is classified as a warning country.It has a population of under 3 million,10%of that of Cte dIvoire,and its GDP is one-third that of Cte dIvoire.Still,it has nearly twice the number of exporters,even though it is a landlocked country.Though the relationship between exports and fragility is co

280、mplex,the latter likely plays a role in explaining the disparity in trade performance.This,coupled with economic structure and other factors,affects the economic fabric of the country and the business opportunities available.The drop in general exports does not usually apply to extraction and trade

281、of natural resources,because these tend to operate as enclaves and can afford additional protection.As a result,many countries affected by fragility and conflict become increasingly dependent on commodity exports,often dominated by few large firms,as a source of revenue.46Alongside this commodity de

282、pendency,the behaviour of established firms often leads to market concentration,with few but powerful enterprises(Figure 11).This is because weak political governance enables established companies to restrict or drive out competition and engage in rent-seeking.47 Such activities include influencing

283、regulations to their own benefit and using connections with government officials and informal powerholders.48 In addition,many of these powerful companies are state-owned enterprises,creating an unequal playing field for businesses and lowering the incentives for activities that enhance productivity

284、.Figure 11 Market concentration,fewer exporters Source:ITC,based on the Fund for Peace FSI and World Bank Exporter Dynamics Database(EDD).Number of exporters(median)Herfindahl-Hirschman Index(median)Fragile States Index(FSI)WarningElevatedwarningHighwarningAlertHigh alert7.91,0267.51,2336.82,5026.24

285、,4135.18,039SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH13More firms created,and failingWhile more informal and necessity-driven firms are created as fragility increases,business failure is also more common.49 This reflects the fact that smaller and newer ventures have less experience and f

286、ewer resources than established firms,leading to higher exit rates as fragility grows(Figure 12).In dynamic markets,companies enter and exit constantly.This is not necessarily negative,as overall economic productivity increases when new,innovative companies are created and those that are least compe

287、titive fold.However,in fragile and conflict-affected settings,the survival of firms is arguably more valuable,and not just because these small firms sustain the livelihoods of millions.After conflict has ended,many have observed a phenomenon known as the Phoenix effect.50 This refers to a sharp uptu

288、rn in entrepreneurial activity,as firms that have managed to cope with fragility and conflict experience a rebound when countries return to peace.Thus,prioritizing business survival during conflict is important for leveraging economic opportunities later,which,in turn,can help sustain long-term stab

289、ility.Figure 12 Entry and exit increase with fragility Source:ITC,based on the Fund for Peace FSI and World Bank Exporter Dynamics Database.Entry and exit rates of exporting firmsFragile States Index(FSI)0.250.30.350.40.450.52040608010014SME COMPETITIVENESS OUTLOOK 2023THOUGHT LEADER15SMALL BUSINESS

290、ES IN FRAGILITY:FROM SURVIVAL TO GROWTHOuided BouchamaouiNobel Peace Prize co-Laureate Business leadership in a time of transitionTHOUGHT LEADERBy working together and with others at times of uncertainty,businesses can help build stability and strength.am discrete by nature and have tended to avoid

291、the spotlight.Still,my work led me to become a public figure in very challenging circumstances.In 1990,I became involved in an employers organization.I rose through the ranks of the most prominent and oldest organization of business owners in Tunisia,the Tunisian Confederation of Industry,Trade,and

292、Handicrafts(UTICA),to become its President.In fact,I was the first woman in Tunisia and the Arab world to lead an employers federation.The year was 2011,when protests started in Tunisia what would later be known as the Arab Spring.I found myself having to restore the reputation of the private sector

293、,and build a broad coalition to sustain the transition,while also dealing with personal threats to my safety and that of my family.Changing perceptionsIn the aftermath of revolution,there was stigma against being a business owner because many felt the business community benefited from the previous r

294、egime.My first task as UTICAs President was to change public perception,and emphasize the pivotal role played by the private sector,especially small businesses,in spearheading innovation,creating employment,building resilience and underpinning economic stability.In countries in transition,these busi

295、nesses also promote much needed social cohesion and inclusiveness,by enabling people from diverse backgrounds to participate in economic activities,fostering gender equality and generating opportunities for young people.The upheaval experienced in the country after January 14,2011 is the flip side o

296、f the democratic transition process.Many organizations,associations,national bodies and even political parties did not survive the transition,for diverse reasons.UTICA withstood the storm by staying true to its mandate to support the private sector and avoiding political disputes and battles.I oppos

297、ed every attempt to align the organization to specific party interests,as I was convinced that only by maintaining total independence would the organization be able to preserve its credibility and play its part in shaping a new Tunisia.I ITCTHOUGHT LEADER16SME COMPETITIVENESS OUTLOOK 2023Need for br

298、oader coalitionI also knew that we could not do it alone,and that a broad coalition had to be forged.Building a network is critical for business success,and that is no different for a private sector organization.In this context,I sought a rapprochement between UTICA and the countrys trade union fede

299、ration.While some thought that the coming together of employer and worker federations was illogical,and even somewhat suspicious,we showed that we could work jointly to safeguard democracy.This rapprochement did not eliminate our differences,as each side continued to promote its perspective and defe

300、nd the interests of its constituency,but we succeeded in reducing conflict and easing social tensions by bringing stakeholders together through dialogue.In 2013,two political assassinations of members of the opposition shook the country.We were afraid that we would lose our democracy.At this junctur

301、e,UTICAs collaboration with the labour federation expanded to include the Bar Association and the Tunisian Human Rights League.We became known as the National Dialogue Quartet and together we underwent several gruelling months of negotiations with dozens of political parties to safeguard the fruits

302、of the revolution.The process was not easy,but we persevered and succeeded.People recognized that democracy was possible in our region and in our country.They saw that dialogue was possible even in difficult times,and perhaps even more needed.And yes,we won the Nobel Peace Prize.After the National D

303、ialogue was over,I decided to step down in favour of new leadership in UTICA.Many in Tunisia found it hard to believe that an official would willingly give up power,and leaving was my last official contribution to a smooth and orderly transition.I announced my decision not to pursue a second term be

304、fore an audience of some 2,500 UTICA members,receiving a standing ovation.The memory of that moment,and all that preceded it,will always fill me with pride and hope for better days ahead.FRAGILITY FROM A BUSINESS PERSPECTIVECHAPTER SUMMARYHow and to what extent does fragility affect different locati

305、ons?Are specific enterprises or groups of enterprises likely to be exposed more than others?Just as fragility varies from country to country,its impacts may also differ from region to region within a country,and from firm to firm within a region.ITC analysis shows that firms are more or less exposed

306、 to fragility depending on location,size and type of ownership.Moreover,fragility can be doubly adverse.Some firms are harmed both by operating in more fragile settings and by being particularly exposed to,and affected by,the prevailing state of fragility.As such,macro measurements must be complemen

307、ted by micro assessments to ensure that support programmes and policies are targeted to local and firm contexts.The new ITC Fragility Exposure Index provides a good starting point to understand fragility from a business perspective.When linked to the ITC Competitiveness Framework,it gives critical i

308、nsights on how to improve a small firms capacity to cope with fragility in a positive,growth-enhancing manner.While a country may be entirely classified as fragile,conditions may differ widely sub-nationally.In Ukraine,for example,conflict has been more intense in the eastern parts of the country.Fi

309、rms in these regions are arguably more exposed to the effects of fragility and conflict.However,all firms,regardless of their location,are likely to experience increased fragility compared with their pre-conflict state.Much attention has been given to measuring and addressing fragility at the macro

310、level,but there has been little analysis of the exposure and impacts at the micro level.Fragility manifests itself through security,economic and social channels,affecting firms differently.If fragility involves higher criminality,a larger firm with recourse to private security is likely to be less a

311、ffected than smaller firms without such resources,though this comes at the expense of other,more productive investments.Similarly,if social norms and economic practices disempower women,fragility is likely to have a greater negative impact on a women-owned firm than the male-owned company next door.

312、Understanding fragility from a business perspective deserves attention.CHAPTER 2Fragility from a business perspective SMALL BUSINESSES IN FRAGILITY:FROM SURVIVAL TO GROWTH17Fragility is multilevel and multidimensionalCountry-level measures of fragility are useful,but blunt,instruments to guide targe

313、ted interventions.Although such indices shed light on overall impacts of fragility,they provide little information on the factors that drive these impacts and how they vary across space and firms.To overcome this limitation,ITC collected data and developed an index of fragility based on firms report

314、ed experiences.The ITC Fragility Exposure Index aggregates firm-level scores,illustrating how different companies experience the same overarching state of fragility.Measuring fragility at the firm levelThe ITC Fragility Exposure Index recognizes that fragility has multiple levels and dimensions.It i

315、s multilevel because fragility may vary significantly across locations within the same state,making it necessary to break down country-level gauges to understand them better.It is also multidimensional because fragility manifests itself through several channels,exposing firms to different types of f

316、ragility.Based on firms responses to the ITC Small Business in Fragility Survey(Box 2),the ITC Fragility Exposure Index consists of three pillars:security,economic and social.Security pillar:assesses if and how a business is exposed to and experiences insecurity and violence.Impacts may include dama

317、ge to business assets,forced relocation or temporary shutdown,customers feeling unsafe,loss of staff due to violence,staff stress-related illness,injury or physical harm,harassment of staff or customers,and requests for unofficial payments,bribes and extortions.Economic pillar:assesses how firms are

318、 exposed to and experience fragility through reduced economic performance and opportunities.These may be due to difficulty accessing resources and getting products to customers,lower demand,clients refusing to pay bills and reduced investment and revenues.Social pillar:measures the exposure to and e

319、xperience of fragility in the social fabric of the company and its relationships.This reflects trust of the owner and staff in people,networks,business support organizations(BSOs)and local and national governments.The ITC Fragility Exposure Index assesses whether entrepreneurs are safe,have equal ac

320、cess to economic opportunities and belong to the social fabric of the place where they operate.A firms experience of fragility is the sum of the fragility experienced under each pillar,with higher values indicating that it experiences the effects of state-level fragility more strongly.51 As the inde

321、x is based on companies own answers,it captures both objective facts and perceptions.Business location mattersThere is considerable variation in how firms are exposed to and experience state-level fragility,across and within countries.While the experience of fragility in the ITC sample was clustered

322、 around the respective countrys average level of fragility,some companies reported considerably higher or lower intensity than their national peers(Figure 13).This finding holds broadly for all countries in the sample,but with notable differences.For example,in Colombia and Honduras two countries no

323、t classified as fragile or affected by conflict the average intensity of fragility experienced by companies is lower than in other places,as expected.Additionally,the experience of fragility in these two countries is more tightly bunched near the average,with a very small number of firms reporting l

324、ower or higher intensity.In Burkina Faso and Myanmar,in contrast,the average intensity of fragility is higher,and the distribution is much wider,with some firms reporting much lower or higher experiences of fragility.This suggests that firms in Colombia and Honduras tend to have similar experiences

325、of fragility(or lack thereof),whereas in Burkina Faso and Myanmar,there is much more variation in experiences from firm to firm.52In addition to state-level fragility,several factors may influence the intensity with which a firm experiences fragility.First,a firms location can affect its exposure.Se

326、cond,the types of fragility to which it is exposed,as defined by the Fragility Exposure Indexs three pillars.Third,how vulnerable it is to these types of fragility.Finally,the coping mechanisms it has to lessen the impact.The first three factors are addressed in this chapter,whereas the last one is

327、the focus of Chapter 3.18SME COMPETITIVENESS OUTLOOK 2023FRAGILITY FROM A BUSINESS PERSPECTIVEFigure 13 Firms experience fragility differently,across and within countries Source:ITC,based on ITC Small Business in Fragility Survey.0.01.02.03.04Density020406080100ITC Fragility Exposure IndexHondurasCo

328、lombiaKenyaIraqBurkina FasoMyanmarSouth SudanUkraineBox 2:The ITC Small Business in Fragility SurveyBetween November and December 2022,ITC partnered with the International Security and Development Center and the Norwegian Refugee Council to design and carry out a survey assessing the experiences of

329、small businesses in fragile and conflict-affected settings.The Small Business in Fragility Survey collected information on two aspects of fragility.One set of questions helped identify the level and structure of fragility to which firms are exposed individually,which was used to build an index.Anoth

330、er set of questions assessed the extent to which fragility,as experienced by the firms,influences the obstacles they report.This helps to link the index to actual business outcomes.The survey covered eight countries:Burkina Faso,Colombia,Honduras,Iraq,Kenya,Myanmar,South Sudan and Ukraine.The World

331、Bank classifies five of these Burkina Faso,Iraq,Myanmar,South Sudan and Ukraine as fragile and conflict-affected.The other three have experienced state-based violence in the past,with the Fund for Peace in 2022 issuing elevated warning for Colombia and Honduras and high warning for Kenya.In six coun

332、tries Burkina Faso,Colombia,Iraq,Kenya,Myanmar and South Sudan the survey covered a random sample of companies whose competitiveness ITC had previously assessed through its SME Competitiveness Survey(SMECS).This allowed responses to be combined,providing insights on whether competitiveness factors w

333、ere associated with the firms experience of fragility.ITC had not previously interviewed any of the firms in Ukraine and Honduras.Their inclusion aimed at assessing different dimensions of fragility and ensuring wider geographical coverage.In total,1,323 firms were interviewed,of which 1,095 participated in both the SMECS and the Small Business in Fragility Survey.Note:For additional information o