This study aims to understand how the regulatory framework in a country can impact the most vulnerable actors of the private sector, i.e., the MSMEs, and the extent to which MSMEs are involved in the development and implementation process of the said regulations.
Regulatory frameworks are a key to sustainable development of any nation’s business and trade sector. Governments need to ensure that the regulatory framework in place in the country is effective and inclusive for all, including for Micro, small and medium enterprises (MSMEs) including those run by women entrepreneurs. This research aims to understand how the regulatory framework in a country can impact the most vulnerable actors of the private sector, i.e., the MSMEs, and the extent to which MSMEs are involved in the development and implementation process of the said regulations.
MSMEs are key actors in almost every trading system in the present world of globalisation. They represent the most significant number of firms in all continents and contribute significantly to both employment generation and Gross Domestic Product (GDP) formation. MSMEs constitute an essential segment of the global economy regarding their contribution to the country’s industrial production, exports, employment, and the creation of an entrepreneurial base. Women entrepreneurs play a crucial role in the MSMEs sector and the economies of both developed and developing countries. According to the International Finance Corporation, women own 50% of microenterprises and 59% of small and medium-sized enterprises (SMEs) in East Asia and the Pacific, and women in South Asia own 10% of microenterprises and 8% of SMEs (IFC, 2017). With time, women-led business organisations are becoming a more critical part of the economy.
At present, it can be witnessed that some governments are providing stronger emphasis on MSMEs while developing the trade regulatory framework and are attempting to ensure that implemented regulations and policies are beneficial for the MSME sector and women entrepreneurs. For example, better access to markets, information, and finance are some areas where the regulations have been / should be designed in a manner that supports MSME growth. However, this objective seems to still be beyond reach for most developing and least developed countries (LDCs).
It is worth noting that the MSMEs are seldom fully involved in the regulatory development and implementation processes in both developed and developing countries. The participation of women entrepreneurs has been even less. Not involving MSMEs and women entrepreneurs in the regulatory framework development and implementation processes can create some critical challenges for the government and the economy as whole in the short and medium-term and create a lack of trust or coordination between the government and the MSME sector leading to non-compliance to laws and regulations, etc. International organisations, including the World Trade Organization (WTO), have emphasised the importance of involving MSMEs in the regulatory development and implementation processes to strengthen the business sector and ensure more robust and inclusive economic growth and development.