Help Small Businesses to Export
The United States should also make it a priority to boost exports by America’s small and medium-sized companies. As noted above, small business has long been recognized as a motor of job creation and innovation, but Americans tend to regard international trade as the domain of large multinationals.
Nonetheless, America’s smaller companies are already making a large contribution to U.S. exports. In fact, more than 97% of U.S. exporters are small and medium-sized enterprises (SMEs), and they account for nearly a third of U.S. merchandise exports, according to the U.S. Department of Commerce. The number of SMEs that export has risen two-and-a-half fold since 1992, reaching nearly 270,000 today. During the same period, their export revenues tripled, surpassing $300 billion in 2009. However, this impressive figure represents just one of every 100 U.S. companies.
If more U.S. small businesses were able to seize export opportunities, the gains could be immense. In a sign that they may just need a little help, a World Bank study (Export Promotion Agencies: What Works and What Doesn’t) found that each dollar increase in export promotion expenditures brought a 40-fold increase in exports. The gains were especially large for countries that spend less than the average. As it happens, the United States spends just one-sixth of the international average helping its small businesses to export.
In a good first step, the National Export Initiative launched in 2010 includes commitments to step up the efforts of the U.S. Commercial Service, the U.S. Export-Import Bank, and other agencies to help small businesses tap foreign markets. Increases have been proposed for the $300 million budgeted annually to promote the exports of America’s small and medium-sized companies. In addition, the financial resources of the Export-Import Bank to help small businesses export are being expanded. The U.S. Chamber has supported these initiatives.
Investing in the export potential of America’s small businesses could bring significant gains. Today, American exports are surging, and a helping hand for U.S. smaller companies could spread those gains more broadly. Showing how smaller companies can gain from trade would also help build political support for international trade. By adding to the ranks of small businesses that see direct benefit in exporting, Americans will be able to see more clearly the possibilities offered by worldwide trade.
- The United States should redouble its export promotion efforts to expand the universe of companies that benefit from international trade.
- U.S. export promotion programs should center on America’s small and medium-sized businesses, which account for the vast majority of all exporters.
- The capabilities of the Export-Import Bank to help small businesses export should be enhanced.