Trade matters for smes
If you think trade
doesn’t matter to SMEs,
Small- and medium-sized enterprises (SMEs) are the backbone of the world economy. Globally 95% of enterprises are SMEs, representing around 60% of private sector jobs.
In Europe, official estimates suggest that SMEs play an even greater role in promoting employment and social cohesion—providing two out of every three jobs in the private sector.
Trade in numbers
You might have heard
You may be familiar with the argument that trade agreements only benefit big businesses. The idea goes that small firms lose out to multinational companies when markets are opened up to international competition—destroying local industries and shifting good jobs to other countries.
“TPP is part of a global race to the bottom to boost the profits of large corporations and Wall Street by outsourcing jobs.“
Bernie Sanders, US Senator
But is this really the case ?
The available research paints a very different picture…
Evidence from a broad range of sources suggests that exporting can provide a huge boost to SME growth. One recent study showed that small businesses that trade internationally on average grow more quickly, pay better salaries and create more jobs.
It’s also important to understand the symbiotic relationship between big and small firms in today’s global economy. Around 80% of global trade occurs in global value chains coordinated by multinational companies, but close to half of “added value” within these chains is contributed by local SME suppliers. So when you think of big global brands like Unilever or Walmart, remember that their supply chains contain a huge number of small businesses supplying a vast array of components, products and services.
The contribution of small businesses to global value chains doesn’t seem to be accurately captured in international trade statistics at the current time. Estimates for the United States show that the export share of SMEs increases from approximately 30% to more than 40% when valued added exports are taken into account. This means that trade matters more to SMEs than official data might at first suggest.
Spread the word
Our series of #TradeMatters case studies aims to plainly illustrate the benefits of international commerce for SMEs who face significant barriers when it comes to accessing global markets. If you are an international small business, submit your story to us including a one-line description of your company and why trade matters to you.