SMEs Contribution to the Creation of the Euro-Mediterranean Region

The paper focuses on the manufacturing sector of 10 Mediterranean Partners, in particular on the industrial structures and their relationship with the market. The Euro-Mediterranean Partnership, and in particular the project of the free trade area, is placing the North-South relationship in a new context. Several studies have demonstrated that the liberalization of the regional markets and increasing competition from European imports will have dramatic effects on the Mediterranean partner countries at both the macro and the micro levels. At the same time, export opportunities and technological spillovers from the forecasted increase in foreign investments can contribute to the upgrading of the Southern Mediterranean production systems, but this depends upon both the type of learning capability and the structure of the Southern Mediterranean countries production system. More than 90% of the total industrial units are family businesses concentrated in traditional sectors utilizing low technology equipment, and supplying to the local markets. They are facing a shrinking purchasing power with changing patterns of consumption. Industrial modernization and export-oriented strategies can have an effect only on a particular type of SME while excluding the majority of the enterprises. The features of the local markets show that development strategies should take increasingly into account the structural characteristics of the production systems and of the markets in which they are embedded.