Technical cooperation concerning the policy and commercial framework for business development with particular reference to small and medium sized enterprises (SMEs) may take the form of providing to individual countries policy advice or technical expertise in various areas, including, for example, the formulation of proactive policies for SME development or of consistent business laws. It may also take the form of helping individual countries to build up their analytical and research capacity, either in support agencies or in business organizations, to analyse, for example, the causes of market failures, the effects of macroeconomic policies on SMEs, the effectiveness of various types of incentives in relation to their objectives or the impact of business laws and regulations on entrepreneurial and business development, including in the informal sector, as well as to determine modalities for improvement. With regard to the regulatory framework, it may be noted that Norway, for example, has established a Business Legislation Committee for the purpose of analysing the impact of business regulations on market and enterprise development. In addition to strengthening public-sector capacities for policy formulation and implementation, technical cooperation in this area may also be extended to deepening indigenous business management skills and promoting the organizational development of private-sector intermediaries.
Technical cooperation concerning institutional support for SME development may take the form of contributing to institution building, including support for the establishment of effective support agencies or SME associations, through inter alia training programmer for capacity building and support for networking, including the provision of equipment, in order to allow support agencies or SME associations in recipient countries to link up with counterparts in donor or other countries for the purpose of sharing information, experiences, lessons learned and "best practices" in the area of support for SME development. Donors can also help in the process of a constructive and collaborative policy dialogue between the public and private sectors, through their own contacts and their support for the development of representative business organizations, including SME associations.
Donors recognize that differentiated approaches may be needed for different categories of countries. As indicated in a report of the Development Assistance Committee, "Middle-income countries in general have well-established private sectors and the basic institutions and markets for producing and selling goods and services. The role will often be to support business-to-business linkages (i.e. transferring capital, technology and management and marketing know-how) and the creation of business networks. Nevertheless, it will be important for donors to continue building local and institutional and technical capacities and helping to create a more favourable environment for initiative and investment in these middle-income countries. Least developed countries, which have fewer and weaker institutions - markets and entrepreneurs and more destabilizing factors, need assistance targeted at improving the enabling environment, strengthening institutions and establishing threshold conditions for business. Countries of the former Soviet bloc present altogether different needs and opportunities: while production skills and basic infrastructure exist, capital is scarce, marketing know-how is lacking, industry is often unable to penetrate and compete on international markets. Further, attitudes and habits more conducive to private enterprise (i.e. risk taking, the concept of private property, the profit motive) are slow to develop".