GLOBALIZATION AND THE PROCESSES OF TRANSFORMATION OF MYPES
1. GLOBALIZATION: ELEMENTS OF THE GENERAL CONTEXT
1.1 THE INTERNATIONAL CONTEXT AND GLOBAL TRENDS
When starting an analysis of this nature, it is important to refer to the importance of the international environment or context that surrounds the MSEs at the end of the 1970s, we are witnessing changes in the world economy: technological changes, changes in the productive organization, changes of the use of raw materials and new inputs, changes in new forms of exchange (marketing) and also changes between supply and demand in the market for goods and services.
Some authors call these changes the process of Globalization, others the process of internationalization of the economy; represents a growing interaction between expanded markets, acquiring a multidimensional dimension and covers all fields: economic, financial, labor, environmental, ethics, etc.
“Technological innovation” is one of the methods of change, where genetic engineering stands out, the so-called era of services or of a computerized economy. The process of integration of world markets that is taking place supposes an opening of national (domestic) markets, entering into global competition. Where the supply must be made more flexible to respond to a changing demand, diversified, segmented and relatively restricted to volumes of goods and services, but with high quality and low price requirements.
In this sense, disaggregation processes must be carried out in medium and large companies, assuming at the same time the resizing of roles for small-scale units, being a requirement the modernization of the MSEs. In summary.
Global trends:
- Regional and world economic development pushes companies to globalization The production process spreads throughout the world Firms market their products in distant countries. The emphasis for achieving economic development lies in information fluency, productivity, and stable business organizations.
1.2 THE NATIONAL CONTEXT AND REGIONAL TRENDS
The reestablishment of democracy and the application of the New Economic Policy aimed at stabilization, is the scenario of the 80s' until the present, they were oriented to promote transcendental changes in the Bolivian economy and society. They stand out:
• The objectives of the New Economic Policy
Restore external and internal balances; price stability; restructuring of the rules of economic operation and restructuring of the productive apparatus; the market as the best allocator of resources; shrinking of the state; transfer of the dynamic role to the private initiative.
• Generic, small and micro-enterprise policies
Relocation and freedom of contract; initial wage freeze and subsequent wage containment policy; unrestricted market opening; incentives for the production of tradables; creation of free zones; temporary importation regime for exports (RITEX); investment law (L.. 1182)
• Small, micro-enterprise and main problems derived from the PAE
Absence of sectoral policies; state minimization; strong asymmetries and heterogeneity of economic, social and political agents in access to opportunities; denial of roles of the state as equalizer of imbalances.
In Bolivia, the size of the economic unit, defined by the number of workers, is directly associated with:
- Levels of complexity in work processes and technological development;
- Management and management systems;
- Production and productivity levels;
- Strength in market insertion;
- Levels of formality and regularity in the economic unit - legal institutionality relationship.
In summary, the regional trends are:
- Regional integration agreements with demands for greater competitiveness to national production.
- Cities support a greater population concentration every day.
- Cities produce more than 55% of GDP
- Companies boost the dissemination of knowledge
- The production process is concentrated in the hub cities.
- Municipal Governments become more important for economic development, due to decentralization.
- Small cities with the minimum infrastructure necessary for development tend to grow.
2. THE CHARACTERITICS OF THE SIZE OF THE COMPANIES
Despite extensive individual differences it is possible to outline some important areas where micro and small businesses differ from larger ones. Commonly companies are classified only according to the number of workers and the capital invested. The following table indicates other aspects that are important, such as the employer's educational level, percentage of family work, division of tasks, etc.
CHARACTERIZATION OF MYPEs VS. LARGE COMPANIES
| FEATURES | MyPEs | Bigger | |
| one | Number of workers | <5 | > 20 |
| two | Capital / Labor Ratio | Low | Tall |
| 3 | Task division | Low | Tall |
| 4 | Percentage of outsourcing in production | Low | Tall |
| 5 | Family involvement in production | Tall | Low |
| 6 | Owner's educational level | High school | Advanced |
| 7 | Market access | Near | Far |
| 8 | Time horizon in planning and decision making | Max. 2 years | > 2 years |
| 9 | Motivation to expand the business | Moderate | Tall |
3. CHALLENGES OF CHANGE FOR SMALL-SCALE UNITS
The importance of small economic units is often heard, in the new international and national context, showing spontaneous development or through market forces.
However, when we reflect deeply, our small companies in Bolivia have a technological backwardness, precarious conditions of operation and employment of the workforce. However modernization requires some conditions:
- Greater modernization and productive flexibility in plant
- Agile and debureaucratized organizational structure;
- Multifunctional qualification of the workforce;
- High productivity and quality in the processes;
- Capacity for permanent innovation of new products and designs;
- Ability to respond to partnership opportunities with other companies
- Opportunities for cooperation with companies of similar size and condition
- Ability to enter new marketing circuits through timely information and communication.
These challenges are key to the formulation of policies oriented to change; on the other hand, the promptness and efficiency for the new changes to begin will define the real possibility or the loss of opportunity for a short-term insertion in the national market and why not international.
Microenterprise: ………… Axis of a new development?
THE CHALLENGES OF THE CHANGE OF MYPES
|
Variable |
Small company |
Micro-enterprise |
| Technology | Tall and flexible | Rudimentary |
| Organization | Agile and debureaucratic | Patriarchal |
| Workforce | Multifunctional | Bad note |
| Productivity | High and quality in the processes | Low |
| Innovation | Introduction of new products and designs | Copy capacity |
| Joint | Timely | Informality in agreements |
| Market insertion | Agile and dynamic | Weak |
| Mentality | Aggressive | Defensive |
Source: Larrazabal, 1997
Like other economic activities, the Mype is influenced by legal and institutional regulations and public and private infrastructure. The state is true when modernizing, when implementing the new economic model and being in the presence of globalization create opportunities for the small and micro business sector to grow; But, they must make the changes that make it possible to compete in the market.
The progress in microfinance is remarkable, but systems must be adapted to the current period and the current situation. The infrastructure offered by public and private institutions are very few (there are no railway fields); The state must include in the PGDES, in the PDDES, in the PDMs pre-investment and investment projects that benefit the sector.
4. LIMITATIONS AND POTENTIALITIES OF MICRO-ENTERPRISES IN THE NEW CONTEXT
|
STRENGTHS |
OPPORTUNITIES |
| Generator of employment Creativity to adapt machines and / or tools
Flexibility of the economic unit in the face of market changes. Multifunctional workforce Productive experience accumulated in each company. Ability to copy products and models. Attention to small market niches. Persistence to continue developing activities in the market. |
Reduced requirements for public investment. Use of inputs and national raw materials.
Flexibility to make technological and investment adjustments. Existence of market niches for timely attention. redistributive effect of their employment / income development. Regional demand for basic goods and services. |
|
WEAKNESSES |
THREATS |
| Lack of entrepreneurial mentality (risk and profitability) Traditional decision criteria / alternatives.
Low endowments of productive resources. Lack of real guarantees. Liquidity problems. Use of manual technology and lack of quality criteria. Little division of labor. Insufficient manpower qualification. Low productivity. High production costs. Weak market insertion. Lack of knowledge of marketing systems. |
Ineconomies of scale Technological obsolescence
Low productivity Little access to technical and technological information. Limited access to on-site training and assistance. Weak access to information about markets and their trends. Weak institutional and legal framework for regulation and promotion of the sector Heavy administrative and tax control systems. Little state support to encourage small-scale activities. Inequalities of access to economic resources that allow them to compete in the market. |
In the respective analysis we can say that there are strengths and weaknesses in the activities carried out by the MSEs:
Strengths
Better geographic distribution
Intensive use of resources
Better distribution of resources
Greater job creation
Increased flexibility
Weak points
Low access to resources
Low manpower qualification
Weak negotiation skills
Low business capacity
Lack of strategies to CP and LP
5. NEW APPROACHES TO MICROENTERPRISE SUPPORT PROGRAMS
It is necessary to consider new approaches to support MSEs in the external and internal context to which we have referred, they should consider:
- Markets and competitive factors Assign importance to the identification of the entrepreneurial capacity of the small producer Promote the democratization of services aimed at microenterprises (credits, training and technical assistance in the plant. Identification of organizational models Develop the concept of industrial districts at the municipal level
Let me comment on some programs that are framed in this new approach. It is being carried out and Plant Advisory Programs (PAP) are being implemented; Outsourcing program (PROSUB); Marketing Program (COMFIE); Support Programs for Marketing and Management Training (IDEPRO).
Because these new programs are being developed, simply because it is recognized in society, in the authorities, in private institutions that small economic units have potential and are subject to actions and services that will contribute to the economic growth of the country.
These economic units are dynamic, since they generate employment, make permanent productive adaptations, adapt to market conditions; but they also have an infinity of permanent problems and challenges, so all these economic agents involved must do something
- The central government authorities from the Vice Ministry of Microenterprise must not only regulate, but also execute the plans that have been drawn up in various departments (as in the case of Oruro, the “Productive development strategy for MSEs, in Oruro, 2000) Institutions such as the Technical University of Oruro, which permanently conducts research on MSEs and these are not considered by the sector and are often archived, must disseminate and cooperate with the sector. The municipal government and the prefecture are giving support to the MSEs but with limitations within their powers framed in their regulations. Small producers, in many cases, are passive and must be proactive and participate in events such as this seminar and other events that benefit the sector.
6. CURRENT SITUATION OF MICRO-ENTERPRISES IN ORURO
There is a document in which I have participated as a professional economist, I refer to the "Productive Development Strategy for micro and small businesses in Oruro" this technical document has allowed to identify that there are important economic activities in the sector:
Urban area:
- Food 1 (Producers of Charque, ice cream and granola.)
- Food 2 (salt producers, bakeries, sausages)
- Textile and leather clothing
- Carpentry
- Metal mechanics
- Goldsmithing and productive crafts.
The characteristics of these economic units have characteristics similar to those of the country, that is, limited business management capacity, technological lag, high financing costs.
- These units have a family and semi-business structure. Its products are oriented to: fashions and temporary needs; quality that varies depending on the market and price; production varies quantitatively and qualitatively since it is a function of customers, consumers or intermediaries and is a function of the resources used. The market they serve is local and some serve the national market (in the case of textiles). Estimated investments are in the range of US $. 500.- to $ us. 8,000.- The workforce is characterized by the skills and abilities they have and fundamentally by the experience of the teachers and the owner.Marketing is simple, in some cases it is from the producer to the consumer and in other cases it is producer - intermediary - consumer. The support services for the MyPes in Oruro are not many but we can reflect in the following table:
|
Training |
Technical assistance |
Financing |
Public institutions |
| IdeproInfocal
Fie Udatel |
SAT | SOLFIE bench
Ecofuture Sartawi Prodem Idepro Fades |
Directorate of Productive Development Prefecture of Oruro Directorate of Productive Promotion GM Oruro
UTO |
- Business management is unknown to most micro-entrepreneurs
The "Productive development strategy for the MyPes of Oruro" proposes a series of objectives.
- Position the MSEs of the Department as leading actors and contributors in regional development, through continuous strengthening. Expand the participation of MSEs in local and regional media. Adapt support services to MSEs. Raise productive capacity. Strengthen the organization of the MSEs, to be representative, unitary and participatory in their own development. Reduce legal and institutional informality.
Some relevant strategies are:
- Permanent promotion of products with added value in all kinds of events, trade fairs. Construction of fair ground and artisan house. Promote certification and awards for business excellence. Search for new markets for products from the Oruro MSEs. Dissemination of strategic alliances between MSEs to participate in public tenders. Training and permanent technical assistance and your plant. Collaboration of Municipalities, Prefectures and the University in business initiatives. Management to attract financial resources. Facilitate the importance of machinery, equipment and tools with zero tariff. Adapt the collection of basic services according to the productive activity. Flexibility of public institutions regulating MSEs.
7. POSITION OF MYPES IN THE CONTEXT OF GLOBALIZATION
So far, the elements, the advantages and disadvantages of globalization have been seen, the problem of the MSEs, the strengths and weaknesses, has also been analyzed, but it is the duty as a professional economist to propose and clarify what the position of the MSEs should be in this context.
- MSEs are aware that the globalization process allows them to have access to technology and modernization. The market is tough and only those who compete in terms of quality and low price survive. Small economic units must be competitive in terms of carrying out productive transformations and changes in these units. They should be inserted more in local and national markets, to then make a leap towards external markets. It is necessary to have greater productivity and therefore produce more. Finally, it is essential to join a union and be in a position to make all kinds of micro-business alliances.
This working document has shown that globalization in Bolivia is profound and irreversible in this context, the State is a strategic actor as manager, coordinator and guide of productive development in globalization and must attend and support all the small and micro-enterprises in the country.
Oruro, March 15, 2002
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