The development of the Small and Medium Enterprises (``SMEs``) is vital in terms of elevating competitiveness through fostering individual entrepreneurs in the domestic economy. Also, the SMEs serve a central role especially in the business of supplying raw materials; contribute to developing local economies; and improve exporting in the developing countries. The Korean government, recognizing these beneficial aspects of the SMEs, has made efforts to foster the SMEs from as early as the 1960s by the enactment of the SMEs Act, ``Framework Act``. The Act has unsatisfactorily pursued the balanced development of the SMEs and large companies not only because small size and less capital make the SMEs susceptible to rapid changes of the external environment, such as exchange rate fluctuations but because the SMEs compete with small number of large business conglomerates. In recent years, as a solution to these problems, the Korean government has launched the corporate partnership policy between large and small businesses for the sound development of the national economy. The SMEs must have competitive power through sustainable renovation activities to outlive the rapidly changing environments. The SMEs should be positive on risk-taking entrepreneurship with vision and confidence based on the creativity. To this end, sincere efforts of the SMEs are required, but external factors of corporation such as friendly business environments are much more requested. The SMEs Act has been amended to reflect the change of the government policies from protection of the SME industry into fostering autonomy and competition. In conclusion, to develop effectively operative legal system on the SMEs, it is necessary to provide a national economic model from the Constitutional level, the fundamental laws of the country as well as to improve legal surroundings in the level of individual Acts. For promoting the economic policies in a country, the gaps between large and small firms in various dimensions should be reduced in the long run. Once the policies on the SME developments based on these observations are systematized, the basis of the regulation system of the SME policy in a country must be constructed.