Governments have an important role to play in the capacity building of SMEs. First, the fundamental key to a successful SMEs development strategy is the establishment of an environment that helps SMEs to compete on a more equal basis. Governments need to re-evaluate the costs and benefits of regulations that place a disproportionate burden on SMEs, implement regulations with the flexibility needed by SMEs, and place greater emphasis on competition and procurement policies to open SMEs access to markets. Second, to target public expenditure carefully in order to use scarce public resources effectively, governments need to design a clear, coordinated strategy for SMEs development that carefully separates equity and efficiency objectives. Public expenditure should be confined to those services and target groups that are underserved by the market and for which there is a clear justification based on public goods or equity considerations. Government assistance can also play an important role in exporting success of SMEs through access to finance, infrastructure, training programs and reducing bureaucracy. Support at the regional level through investment in infrastructure that assists directly the business efficiency of SMEs is important. Policymakers also need to focus on removing barriers affecting trade. Because SMEs lack the economies of scale and the internal expertise of larger ones, therefore they need more practical external support. This research aims to shed lights across provinces of Iran. The status of industrial public budgets is investigated. Finally based on the findings, lessons and conclusion will be drawn, and guidelines for policy formulation will be suggested.
