Examining the problems of small businesses provides insight into larger problems faced by the private sector. In economies where entrepreneurship is rewarded, firms grow from small to medium to large. In economies where the business environment is deficient, small firms tend not to grow and there are very few small formal firms. Such economies are usually characterized by large informal sectors at one end of the firm size spectrum, and a small number of dominant large firms at the other. In many, there is a “missing middle” of small and medium sized enterprises. ERI assists SME policy makers develop and implement polices that encourage SMEs as well as improve the business environment more generally.