oecd wptgs (oct. 2010)
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OECD WPTGS (Oct. 2010). The Role of SMEs in US and EU Exports Alexander Hammer and James Stamps Office of Economics U.S. International Trade Commission. What is the USITC?. Independent and objective U.S. government agency with broad investigative responsibilities on matters of trade - PowerPoint PPT PresentationTRANSCRIPT
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OECD WPTGS (Oct. 2010)
The Role of SMEs in US and EU Exports
Alexander Hammer and James Stamps
Office of EconomicsU.S. International Trade Commission
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What is the USITC?• Independent and objective U.S. government agency with
broad investigative responsibilities on matters of trade
• Mission:
(1) Administer U.S. trade remedy laws
(2) Provide President/USTR, Senate, and House of Representatives with independent analysis on trade issues
(3) Maintain U.S. Harmonized Tariff Schedule
• Connection to Policy: Informs but does not prescribe
• Used at many stages in trade policy formulation & deliberation
• NEVER determines policy, but is 1 input to policy process
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USTR Requested USITC:
Framework
Study 1Inv. No. 332-508
January 12, 2010
Study 2Inv. No. 332-509
July 6, 2010
Study 3In. No. 332-510
October 6, 2010
What’s known & unknown about U.S. SME exports
Compare US & EU SME exports
Reported views of barriers
Role of FTAs
Identify barriers that disproportionately affect US SMEs
Estimate role of services
4
USTR Requested USITC:
Framework
Study 1Inv. No. 332-508
January 12, 2010
Study 2Inv. No. 332-509
July 6, 2010
Study 3In. No. 332-510
October 6, 2010
What’s known & unknown about U.S. SME exports
Compare US & EU SME exports
Reported views of barriers
Role of FTAs
Identify barriers that disproportionately affect US SMEs
Estimate role of services
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What is an SME? No universally accepted definition by U.S. Government
Even common definition is different from EU
Most Sectors Large Sectorsc
Number of Employees
< 500 < 500d < 500 < 500
Maximum Revenue
- $250K $7 million $25 million
Defining Institution
SBA Advocacye
(Based on U.S. Census data)
USDASBAf / SBA
ADVOCACYfSBAf / SBA
ADVOCACYf
(Selected Exporting Sectorsb)
b Selected on the basis of size and export potential, and includes (1) wholesale trade services, (2) professional, scientific, and technical services, and (3) finance and insurance services, and their associates subsectors. c Computer services was the only subsector in this category.
FarmManufacturinga
Services
f Revenue parameter established by SBA, employee number established by SBA Advocacy for research purposes.
a Also includes non-exporting service sectors.
e SBA, Office of Advocacy from U.S. Cesus Bureau data.
d Threshold imposed by Commission staff to partially harmonize definitions across sectors, but was not imposed by the defining institution.
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SME Role in U.S. Economy
SMEs:
~50% U.S. private nonagricultural GDP (1998-2004)
~99% nonemployer- based firms (2006)
Largest share: wholesale/retail trade, real estate, professional services.
10.0% 11.0%
11.1%
11.6%
15.3%
8.0%
9.4%
23.5%Wholesale and retail trade
Real estate
Professional, scientific, and technical services
Manufacturing and mining
Construction
Health care and social assistance
Finance and insurance
Other
Note: "Other" includes services sectors: utilities, transportation, information, education, entertainment, accommodation and food, administrative and support and waste management and remediation services, management of companies, and other services.
Source: Kobe, The Small Business Share of GDP, 1998 – 2004 , 2007, 8-9.SME GDP = $4.7 trillion
Large Firms: Dominant sector: manufacturing (23.3%)Finance sector bigger than SMEs Real estate & prof. service, & construction smaller
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SME Role in U.S. EconomySMEs: < 20 Employees
(15%) Large Firms(49%)
SMEs: 20-99 Employees
(18%)
SMEs: 100-499 Employees(18%)
CAGR 0.80%
CAGR 1.06%
CAGR 1.63%
CAGR 1.48%
CAGR 1.13%
100
102
104
106
108
110
112
114
116
1998 1999 2000 2001 2002 2003 2004 2005 2006
< 20 20–99 100–499 500+ SME
Index: 1998 = 100CAGR = Compound annual growth rate
Source: SBA Advocacy, Data on Small Business, U.S. Data, from Census data.
Number of employees per firm
U.S. Nonfarm Private Employment (2006)
U.S. Nonfarm Private Employment Growth (1998-2006)
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Data Limitations1. Services Sector: No published SME exports data2. Merchandise Sector: Data can be distortive
Domestic & Global Market
KeyDirect Channels
Indirect Channels
Manufacturer(SME)
Manufacturer(Large Firm)
Wholesaler(SME)
Wholesaler(Large Firm)
Note: Wholesaling is an important
economic activity for SMEs
Available SME DataOn Direct Channels
Available SME DataOn Indirect Channels
Source: Commission staff.
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SME Account ~30% U.S. Exports
-
200
400
600
800
1,000
1,200
1,400
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Ex
po
rt V
alu
e (
Bil
lio
ns
of
$)
0
5
10
15
20
25
30
35
Sh
are
(%
)
SME Unknown Large SME Share Of Known Exports (RHS)
Source: U.S. Census.
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SME Merchandise Exports: By Country Largest in value: Canada & Mexico Largest share: HK, Israel & Switzerland
0 50 100 150 200
Israel
Malaysia
Italy
Switzerland
India
Australia
Hong Kong
Brazil
Belgium
Singapore
Taiwan
France
Netherlands
Korea
United Kingdom
Germany
Japan
China
Mexico
Canada
SME Large
23.2
38.0
20.6
32.0
37.6
29.9
28.6
46.6
27.3
27.1
18.1
25.7
21.6
33.8
33.7
34.2
26.0
31.0
34.3
28.9
74.4
58.7
54.4
54.6
129.5
232.3
119.4
73.3
142.2
147.6
66.8
45.9
80.2
216.5
74.1
93.1
114.7
28.8
224.3
66.4
1.8
-7.9
5.3
2.1
5.9
-8.9
9.9
2.4
4.5
5.8
0.1
-1.0
4.1
13.8
3.7
7.2
2.4
1.1
2.8
4.1
3.830.2 96.7World
SME share
SME growth
Change in shareBillions of $
Source: U.S. Census.
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SME Merchandise Exports: By Sector Largest in value: Electrical Largest share: Wood products
0 50 100 150 200
All nonmanufactured products
Textile mill products
Furniture and fixtures
Leather and allied products
Apparel and accessories
Beverages and tobacco products
Wood products
Printed matter and related products, nesoi
Textiles and fabrics
Nonmetallic mineral products
Plastics and rubber products
Paper
Fabricated metal products, nesoi
Petroleum and coal products
Electrical equipment, appliances, and component
Food and kindred products
Primary metal manufacturing
Miscellaneous manufactured commodities
Machinery, except electrical
Chemicals
Computers and electronics products
Transportation equipment
SME Large
3.830.2 96.7
World
SME share
SME growth
Change in share
15.2
49.2
40.5
56.2
29.2
62.7
36.4
36.0
29.4
33.3
26.8
37.6
31.7
26.4
45.4
32.5
44.3
30.6
24.8
27.6
38.4
40.3
66.8
138.3
70.1
-10.0
172.5
42.2
12.0
9.0
67.7
61.0
43.7
109.5
488.2
83.4
75.2
209.3
106.7
95.4
143.8
59.9
68.3
61.5
0.5
-3.0
-1.5
15.9
16.3
2.5
-12.5
-2.0
3.5
6.8
-0.8
7.4
8.6
2.1
4.5
2.1
-0.2
2.3
5.4
5.6
4.6
7.8
Billions of $
product, machinery, & chemicals apparel & accessories
Source: U.S. Census.
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Smaller the Firm More Export Growth Dependent on Market Entrants
Source: U.S. Census.
Small'07, 1.4 Micro'97, 0.5
Micro'07, 0.8
Small'97, 0.9 Medium'97, 2.6
Medium'07, 5.4
Large'97, 55.4
Large'07, 102.3
(100,000)
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
(50,000) - 50,000 100,000 150,000 200,000 250,000
Firms (number)
Export
valu
e (
Millio
ns o
f $)
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Findings (Study 1)• No universal U.S. Government SME definition (common <500)
• Data problems Lack of published services data inhibits analysis Data limitation on wholesale trade source inhibits analysis
• Despite ~50% U.S. GDP & employment and ~99% U.S. firms, only ~ 30% U.S. merchandise exports
• SME merchandise exports Growth comparable to large firms, but more dependent on new entrants Mostly to NAFTA partners Canada & Mexico Mostly electrical products, machinery, & chemicals
• SME Services data Preliminary research using firm-level data suggest majority to EU, Asia, Canada,
w/professional services to UK and Canada.
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Three Objectives (Study 2)• Compare exporting activities of U.S. and EU
SMEs.• Report U.S. SMEs’ views on barriers to
exporting, and strategies to overcome them.• Identify the benefits to U.S. SMEs of improved
export opportunities from FTAs and other trading arrangements.
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U.S.-EU SME Data Comparisons:Definitions of “SME”
Employment threshold*
• United States: generally <500 workers
• European Union: generally <250 workers
* In addition to employment thresholds, financial thresholds (annual revenue, turnover, or balance sheet total) are also used.
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U.S.-EU SME Data Comparisons:OECD Trade by Enterprise
Characteristics (TEC) Database
5 Datasets• Dataset 1: Trade by activity sector and
enterprise size.• Dataset 2: Concentration of trade by activity.• Dataset 3: Trade by partner countries and
activity.• Dataset 4: Trade by number of partner countries
and activity.• Dataset 5: Trade by commodity and activity.
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U.S.-EU SME Data Comparisons:Data comparability and data limitations
• Data on U.S. and EU firms with <250 workers.• U.S. exports compared to EU exports outside of the EU.• Data are for 2005.• EU data are for “EU-17.”a USITC used econometric
estimate to provide data for EU-24.• Data are for firms in manufacturing industries, and
exclude sectors such as agriculture, wholesalers, and financial services.
a Austria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Hungary, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Slovak Republic, Slovenia, and Sweden.
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Role of SMEs in Exporting and Manufacturing
SMEs (<250 workers) play a less prominent role in both exporting and manufacturing in the United States than in the European Union.
TABLE 2.2 Estimated exports and sales for manufacturing firms, by firm size, United States and European Union, 2005
United States EU-17 (observed)a EU-24 (estimated)b
Billion of $ Percent Billion of $ Percent Billion of $ Percentc Exports
SMEsd 65.0 12.7 126.8 34.1 252.9
(230.9–274.9)e 31.2
Large firms 445.2 87.3 221.1 59.5 535.0
(497.6–572.3)e 65.9
Total 510.1 100.0 371.6 100.0 811.5 (728.5–847.2)e
100.0
Sales
SMEs 920.0 19.3 1,589.8 45.4 3,096.7 39.6 Large firms 3,839.8 80.7 1,914.8 54.6 4,727.6 60.4
Total 4,759.8 100.0 3,504.6 100.0 7,824.3 100.0 Exports/sales ratio
SMEs 7.1 8.0 8.2
(7.5–8.9)e
Large firms 11.6 11.5 11.3
(10.5–12.1)e
Total 10.7 10.6 10.4
(9.3–10.8)e Notes: For sources and notes, see USITC, Small and Medium-Sized Enterprise: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms, July 2010, table 2.2.
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Role of Wholesalers/Intermediaries
Exporting SMEs in the United States (<250 workers) are more likely to be wholesalers/intermediaries than in the European Union.
TABLE 2.3 Estimated share of exports by firm size and major industry, 2005 United States EU-17
Percent Percent a
Share of SME exports through
Manufacturers 39.2 51.4 Wholesalers 41.0 23.8 Other 19.8 24.8
Share of large exports through
Manufacturers 77.4 75.2 Wholesalers 13.8 2.3 Other 8.8 22.4
Share of total exports through
Manufacturers 68.4 65.3 Wholesalers 19.7 12.3 Other 11.8 22.4
Manufactured goods exports as a share of all goods exports, all firm typesb
86.6
88.5
Implied minimum share of manufactured good exports by non-manufacturing firmsb
20.9 26.2
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Exports by Firm Size andMajor Industry
• U.S. export-oriented wholesale firms are larger then EU wholesale firms.• SME manufacturers (<250 workers) in the European Union had larger exports than those in the
United States.
TABLE 2.4 Estimated exports by firm size and major industry, 2005
Exports United States EU-17
Billion $ Percent Billion $ Percent a Total manufacturers 510.1 371.6
SMEb 65.0 12.7 126.8 34.1 Large 445.2 87.3 221.2 59.5
Total wholesalers 147.2 70.0 SMEb 68.0 46.2 58.6 83.7 Large 79.2 53.8 6.9 9.9
Total other 88.1 127.2 SMEb 32.8 37.2 61.3 48.2 Large 50.8 57.7 65.9 51.8
Total, all firms 745.4 568.8
SMEb 165.8 22.2 246.7 43.4 Large 575.2 77.2 294.0 51.7 Notes: For sources and notes, see USITC, Small and Medium-Sized Enterprise: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms, July 2010, table 2.4.
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SME Exports by Sector
The export share of U.S. SMEs (<250 workers) is lower than that of the EU in nearly every sector.– Greater export intensity of EU SMEs relative to U.S. SMEs might be, in part, related to a difference in U.S. and EU industry composition.– SMEs in the European Union accounted for more than 50 percent of exports in 7 manufacturing sectors: furniture manufacturing; metal
products; publishing, printing, and reproduction of recorded media; leather; textiles; wearing apparel; and wood products.
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Findings (Study 2)• SMEs play a less prominent role in both manufacturing and exports in the
United States than in the European Union. However, the export/sales ratios for U.S. and EU manufacturing firms are similar.
• The role of SME wholesalers/intermediaries is greater for the United States than for the European Union.
• U.S. export-oriented wholesale firms are larger than EU wholesale firms. The data suggest that U.S. SME manufacturing firms may benefit from the export services of large wholesalers to a greater extent than do SMEs in the European Union.
• The export share of U.S. SMEs was found to be lower than that of the EU in nearly every sector.
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Next Steps
3rd USITC report on SMEs:
• Due in October 2010
• Report focus on U.S. SMEs only
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Major components of study• Profile of services SME exporters: new data
– Uses customized U.S. BEA and Census data– Questionnaire
• Top trade barriers that disproportionately impede SME exports
• Exports and SME performance• Indirect exports by SMEs• SME operations as multinationals