Small and medium enterprises (SMEs) are the backbone of Western Balkan economies but until recently received relatively little attention from policy makers. Governments focused on consolidating macroeconomic stabilisation and the restructuring and privatisation of large companies. The adoption in 2003 of the European Charter for Small Enterprises contributed to a change in policy perspective.

The SME Policy Index 2007 presents the first comprehensive and comparative assessment of progress made in implementing the Charter. The assessment is based on the SME Policy Index, an analytical tool designed by the OECD Investment Compact and the European Commission, and uses collaborative benchmarking to measure progress in the ten dimensions of the Charter:

• Education and training for entrepreneurship
• Cheaper and faster start-up
• Better legislation and regulation
• Availability of skills
• Improving online access for tax filing and company registration
• Getting more out of the single market
• Taxation and financial matters
• Strengthening the technological capacity of small enterprises
• Successful e-business models and top class business support
• Developing stronger, more effective representation of small enterprises

Governments of the region have already started to take action based on the results of the report through the creation in April 2007 of a South East European Investment Committee which aims to develop detailed guidelines on how to implement reforms in priority areas including the SME environment.

Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia and UNMIK/Kosovo are assessed in this report. A second SME Policy evaluation will be conducted and published in 2009.