Title page 1

Contents 8

Foreword 4

Acknowledgements 6

Reader's guide 11

Acronyms and abbreviations 15

Executive summary 18

SME definition and data coverage 21

Regional SME sector overview 23

SME Policy Index 2026 performance: Overall trends and cross-dimensional insights 29

1. Creating an enabling environment for SMEs and entrepreneurs 37

1.1. Promoting an SME-friendly policy and institutional design 38

1.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support 38

1.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs 40

1.2. Levelling the playing field for SMEs 44

1.2.1. Tackling informality for a more competitive business environment 45

1.2.2. Protecting and monitoring fair market competition 47

1.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms 49

1.3. Facilitating access to finance for SMEs' operations and growth 52

1.3.1. Facilitating bank lending to SMEs 52

1.3.2. Providing alternatives to bank finance 54

1.3.3. Providing direct financial support to SMEs' operations and growth 56

1.4. Providing services essential to SMEs' operations and growth 59

1.4.1. Foundational SME business support services 60

1.4.2. Support services for SMEs' expansion and growth 62

References 66

Notes 70

2. Fostering SME sustainability and resilience 72

2.1. Harnessing SME agility to navigate global market trends 73

2.1.1. Smoothing SME pathways to a green economy 73

2.1.2. Boosting SME competitiveness in sustainable value chains 75

2.2. Building robust mechanisms for SMEs to prevent and manage crises 78

2.2.1. Enhancing crisis-resilient strategies to prevent SME bankruptcies 79

2.2.2. Increasing SME recovery capacity and second-chance opportunities 80

2.3. Enabling SMEs by providing them with access to sustainable financing solutions 83

2.3.1. Supporting SMEs in an evolving sustainable finance framework 83

2.3.2. Increasing SME access to sustainable (bank and alternative) financing 85

2.4. Strengthening SME support systems and networks for sustainable growth 88

2.4.1. Scaling up public non-financial support for SMEs in a green and resilient economy 88

2.4.2. Exploiting the power of networks for the sustainable growth of SMEs 90

2.5. Accelerating research and innovation to future-proof SMEs 92

2.5.1. Advancing strategic innovation for a green and resilient economy 93

2.5.2. Capitalising on knowledge networks for driving SME innovation 94

References 97

Notes 100

3. Supporting the digital transformation of SMEs in the Western Balkans and Türkiye 102

3.1. Strengthening SMEs' readiness for digital transformation 103

3.1.1. Strengthening policy and financial support for SME digital transformation 103

3.1.2. Assessing SMEs' digital maturity 107

3.1.3. Enhancing digital skills and capacities 110

3.2. Increasing SME productivity through digitalisation 114

3.2.1. Leveraging the use of e-commerce and online platforms to drive SME growth 114

3.2.2. Fostering innovation and collaboration for SME productivity 116

3.3. Establishing a trustworthy and safe business environment 119

3.3.1. Adapting data protection to evolving digital threats 119

3.3.2. Strengthening SME cybersecurity resilience 120

3.4. Supporting the sustainable uptake of advanced technologies 124

3.4.1. Encouraging SME adoption of artificial intelligence and emerging technologies 124

3.4.2. Promoting a sustainable digital transformation 125

References 128

Notes 131

4. Harnessing human and social capital for SME development in the Western Balkans and Türkiye 132

4.1. Building foundational human capital for SME competitiveness 133

4.1.1. Fostering entrepreneurial skills and mindsets through education 133

4.1.2. Bridging the divide between education and training systems and SMEs 135

4.2. Developing SME workforce knowledge and skills 139

4.2.1. Understanding and anticipating skills needs 140

4.2.2. Addressing skills needs of SMEs through adult education 141

4.2.3. Upskilling to support AI adoption and use 143

4.2.4. Improving talent availability by empowering women entrepreneurs 145

4.3. Strengthening social capital by advancing social entrepreneurship 149

4.3.1. Mapping the social enterprise landscape 149

4.3.2. Creating an enabling environment for social enterprises 151

References 154

Notes 158

Annex A. Methodology 161

Annex B. The SME Policy Index 2026 scoring model for Bosnia and Herzegovina 167

Annex C. Western Balkans Business Survey - Navigating the Digital and Green Transition 170

Table 1. Statistical data coverage ratings across the Western Balkans and Türkiye 22

Table 2. Key SME indicators across the Western Balkans and Türkiye, 2024 or latest available year 24

Table 3. Labour productivity by enterprise size class, 2024 or latest available year 25

Table 4. SME Policy Index 2026 - Policy clusters 30

Table 5. Western Balkan and Türkiye economies' score performance across dimensions 35

Table 1.1. Legal requirements and available tools for public-private consultations in the Western Balkans and Türkiye 41

Table 1.2. Selected measures used to address informality beyond enforcement across the Western Balkans and Türkiye 47

Table 1.3. Asset registration in the Western Balkans and Türkiye 53

Table 1.4. Active credit guarantee schemes (CGSs) in the Western Balkans and Türkiye 54

Table 1.5. Capital-market legal and policy frameworks in the Western Balkans and Türkiye 55

Table 1.6. Early-stage financing legal and policy frameworks in the Western Balkans and Türkiye 56

Table 1.7. Main providers of targeted direct financial support for SME growth in the Western Balkans and Türkiye 57

Table 1.8. Role of private business support service (BSS) providers in foundational BSS delivery across the Western Balkans and Türkiye 61

Table 1.9. Depth of internationalisation business support services across the Western Balkans and Türkiye 63

Table 2.1. Two policy approaches were identified in strategic frameworks for SME greening in the Western Balkans and Türkiye 73

Table 2.2. Past and ongoing SME-focussed recovery programmes in the Western Balkans and Türkiye 81

Table 2.3. Development of sustainable finance literacy frameworks in the Western Balkans and Türkiye 85

Table 2.4. Development of key sustainable finance policy instruments for SMEs in the Western Balkans and Türkiye 86

Table 2.5. Key innovation strategies incorporating greening objectives in the Western Balkans and Türkiye 93

Table 3.1. Strategic and policy efforts across the Western Balkans and Türkiye targeting SME digitalisation and digital transformation 105

Table 3.2. Financial support measures across the Western Balkans and Türkiye targeting SME digitalisation and digital transformation 106

Table 3.3. Overview of established benchmarks across the Western Balkans and Türkiye for SME productivity in the context of SME e-commerce... 115

Table 3.4. Overview of SME data protection mechanisms across the Western Balkans and Türkiye 119

Table 3.5. Overview of SME cybersecurity mechanisms across the Western Balkans and Türkiye 121

Table 4.1. Entrepreneurship as a key competence in the Western Balkans and Türkiye region 134

Table 4.2. Remuneration for dual vocational education and training students across the Western Balkans and Türkiye region 137

Table 4.3. Government incentives for employers providing dual vocational education and training in the Western Balkans and Türkiye economies 137

Table 4.4. Projected total population in the Western Balkans and Türkiye, by economy, 2025-2050 141

Table 4.5. Maternity leave in the Western Balkans and Türkiye 146

Table 4.6. Official registers of social enterprises in the Western Balkans and Türkiye 150

Table 4.7. Overview of legal frameworks governing social enterprises across the Western Balkans and Türkiye 151

Boxes 44

Box 1.1. Good practice example: Estonia's legislative intent process and oversight for regulatory impact assessment 44

Box 1.2. Good practice example: Italy's regime forfettario: a simplified tax regime to reduce compliance costs and lower entry barriers to... 51

Box 1.3. Good practice example: Broadening the investor base for SME equity and bond markets in Estonia 59

Box 1.4. Good practice example: Enabling SMEs to access external expertise - Ireland's advisory voucher schemes 65

Box 1.5. Good practice example: Belgium's SME Wallet - linking accreditation to voucher schemes to strengthen advisory quality 66

Box 2.1. Good practice example: Understanding and accelerating SME engagement toward net zero in the United Kingdom 78

Box 2.2. Good practice example: Flood risk insurance approaches across OECD Member countries 82

Box 2.3. Good practice example: Unlocking equity finance for green technologies - Canada's Climate Tech Fund II 87

Box 2.4. Good practice example: The Tokyo Zero-Emission Innovation Bay 92

Box 2.5. Good practice example: Aligning voucher schemes with green smart specialisation strategic objectives in Italy 96

Box 3.1. Good practice example: Supporting employer-led skills development through co-ordinated training incentives in Latvia 113

Box 3.2. Good practice example: Strengthening SME e-commerce through co-ordinated infrastructure and platform support in France 118

Box 3.3. Good practice example: KMU.DIGITAL: Operationalising SME cybersecurity and data governance in Austria through staged diagnostics,... 123

Box 3.4. Good practice example: Germany: Accelerating adoption of artificial intelligence by SMEs through compute access, applied testbeds and... 127

Box 4.1. Good practice example: Enabling SME participation in dual vocational education and training in Germany 139

Box 4.2. Good practice example: Strengthening skills anticipation for the green transition: France's National Observatory for Jobs and Occupations... 148

Box 4.3. Good practice example: Portugal Social Innovation initiative: A model for dedicated and structured social enterprise financing 154

Table A A.1. Changes to the weights of thematic blocks 165

Table A A.2. Clusters and constituent policy dimensions 166

Table A B.1. Overview of the four scoring models for SME Policy Index 2026 167

Table A B.2. Application of the scoring models to SME Policy Index 2026 168

Table A C.1. SME target population in Western Balkans and Türkiye, 2025 170

Table A C.2. Western Balkans Business Survey: Navigating the Digital and Green Transition - Sections and subsections 171

Table A C.3. SME respondent sample in the Western Balkans and Türkiye, 2025 172