Andalusia has experienced remarkable growth over the last decades, only halted by the recent economic crisis. The challenge today is to renew with the "prodigious decade" (mid 1990s-mid 2000s) of Andalusia’s development, which will require endogenous development through entrepreneurship and SME growth. This report analyses Andalusia’s capacity to support entrepreneurship and SME development and how such capacity is affected by local policies. It also identifies the challenges faced by new and small firms in growing; analyses the set of local policies for entrepreneurship and SMEs; detects policy gaps; and provides recommendations to fill such gaps and improve current policies. Best practices from other OECD countries corroborate the recommendations and complement the report.