Seminar paper from the year 2018 in the subject Business economics - Economic Policy, grade: 1,7, Berlin School of Economics, language: English, abstract: Small and medium sized enterprises (SME) represent 99,8% of all businesses in the European Union (EU), provide two-thirds of the non-financial sector employment and account for 85% of the new jobs created in the past five years. Looking at the other side of the Atlantic, the situation is not very different: in the United Stated of America (USA) SMEs account for 99,7% of all firms and 48% of total private-sector employment. It is fair to say that SMEs are the backbone of the two largest economic areas of the world. Considering the enormous share that SMEs have in these economies, it becomes clear that the success of an economy largely depends on the development of its SMEs. This paper aims at examining the impact of SMEs on the development of economies in transition. Specifically, the transition countries of the Western Balkan (Albania, Bosnia and Herzegovina, Montenegro, Serbia and The Former Yugoslav Republic of Macedonia (FYRM)) will be subject of this paper. Due to the limited word count, Serbia will be used as example since it is the largest economy in the region. The question to be answered is: "Can transition countries on the Western Balkan utilise the economic momentum of SMEs to facilitate economic growth? Evidence from Serbia".