Terry Matthews: Wales's leading entrepreneur

Companies such as Bluebird Technologies at Pendine, west Wales, could benefit significantly from a shift in focus.

The company announced in August it was setting out to build bespoke vehicles for a dairy company, creating new jobs in an area regarded as an unemployment blackspot.

Current assembly policy - particularly European Objective One strategy for regenerating deprived areas of Wales - "ignores the (entrepreneurial) sector completely", the IWA report concludes.

Its author Professor Dylan Jones-Evans, from the University of Wales, Bangor, said the assembly's targets under the National Economic Development Strategy would be "substantially" boosted by even moderate growth in the SME sector.

Prof Jones-Evans said the Welsh Development Agency and other business organisations should pinpoint SMEs which had the capacity to grow.

Supporting...indigenous businesses within Wales can make a real difference to the prosperity of our nation

Professor Dylan Jones-Evans, University of Wales, Bangor

The professor forecast that a modest 10% growth by Wales's entrepreneurial businesses would create an extra 27,000 jobs by 2005/6 and a turnover of �1.8bn.

Current assembly policy focuses on supporting all types of small business, with many destined not to grow.

Aid for new firms - an area where four out of 10 are destined to fail - can also be misplaced, said Prof Jones-Evans, who is Professor of Enterprise and Regional Development.

Pivotal role

Wales has 15,500 SMEs which are defined as employing between 5-250 workers. They employ a total of 270,000 people and have an annual turnover of �19bn.

Prof Jones-Evans admitted little could be done about fluctuations of interest rates, corporation tax or the strength of the pound.

The professor emphasised the pivotal role of the WDA and organisations such as Finance Wales, and ELWa (Education and Learning Wales).

He added: "They can take immediate action to develop the relevant policies and structures to identify, support and grow those indigenous businesses within Wales, which can make a real difference to the prosperity of our nation."