Small Businesses Drive Jobs, Innovation and Growth Across Latin America and the Caribbean

September 20, 2026: Micro, small and medium-sized enterprises (MSMEs) are playing a central role in the economic development of Latin America and the Caribbean, providing employment opportunities and helping entrepreneurs turn small ideas into sustainable businesses.

From family-run shops and local service providers to emerging technology companies and small manufacturers, these enterprises form an important part of the region’s economic landscape. Their contribution extends beyond business activity, supporting household incomes and creating opportunities for communities across the region.

Microenterprises Account for Major Share of Formal Employment

Microenterprises alone account for approximately 60% of formal employment across Latin America and the Caribbean, highlighting their importance to the region’s labour market.

For millions of workers, these businesses represent an important source of income and economic security. They also provide opportunities for people to establish their own businesses and develop livelihoods within their local communities.

The scale of employment generated by microenterprises means that strengthening small businesses can have wider implications for economic participation and inclusive growth.

Entrepreneurs Turning Ideas Into Businesses

Small businesses often begin with limited resources but can grow through innovation, customer demand and access to finance.

Entrepreneurs across the region operate in sectors ranging from agriculture and food production to retail, manufacturing, tourism, technology and professional services.

Digital tools are also creating new possibilities for smaller companies. Online marketplaces, digital payments, social media and mobile technologies can allow entrepreneurs to reach customers beyond their immediate neighbourhoods.

Challenges Remain

Despite their economic importance, MSMEs frequently face challenges that can limit their ability to expand.

Access to affordable financing is one of the key issues for many small businesses. Entrepreneurs may also face difficulties related to technology, skills, infrastructure, market access and regulatory requirements.

Addressing these barriers can help businesses become more productive and create additional employment opportunities.

Women and Young Entrepreneurs

Small businesses can also provide pathways into economic activity for women and young people.

Entrepreneurship allows individuals to build income sources while responding to local market needs. However, unequal access to financing, training and business networks can make it harder for some groups to establish and expand enterprises.

Greater access to business support and digital technologies can help broaden participation in entrepreneurship.

Digital Transformation Creates New Opportunities

Technology is changing how small businesses operate.

Digital payments can simplify transactions, while online platforms can help businesses advertise products and communicate with customers. Cloud-based services and mobile applications can also reduce some of the costs traditionally associated with running a business.

For entrepreneurs in smaller communities, digital connectivity can potentially open access to markets that were previously difficult to reach.

Supporting Small Businesses Can Strengthen Local Economies

The importance of MSMEs extends beyond the individual companies themselves.

When a small business grows, it can generate employment, purchase supplies from other businesses and contribute to local economic activity. A stronger network of small enterprises can therefore create connections across different parts of an economy.

This makes policies and programmes that improve access to finance, skills, technology and markets particularly relevant to the region’s economic development.

Small Enterprises, Big Economic Role

Latin America’s and the Caribbean’s MSMEs demonstrate how businesses of modest size can have a substantial collective impact.

The approximately 60% share of formal employment attributed to microenterprises illustrates the scale of their contribution. Behind that figure are millions of entrepreneurs and workers whose businesses support families and communities.

As the region continues to pursue inclusive economic growth, the ability of small enterprises to innovate, create jobs and expand into new markets is likely to remain an important part of the development story.