PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Global Trade and the Small Guys

By at 27 October, 2017, 4:27 pm

Small Business Insider

by Raymond J. Keating-

International trade often gets portrayed as being all about the big guys – whether it’s big businesses or even big cities. Reality is quite different. International trade is very much about small businesses and, as noted in a new Pew Research analysis, small counties across America.

Trade and Small Business

As for the types of businesses involved in international trade, the overwhelming majority of employer firms are small businesses. According to U.S. Census Bureau data:

● 86.7 percent of U.S. exporting firms have fewer than 50 workers and 91.9 percent less than 100 employees.

● And on the import side, 85.5 percent have less than 50 workers, and 90.8 percent less than 100 employees.

Trade and Small Communities

Meanwhile, as for parts of the U.S. and trade, small counties turn out to be big on exports. Pew noted that U.S. exports account for about 12 percent of U.S. gross domestic product (GDP). But the percentages can be strikingly higher in small counties. For example, Pew reported:

● “Although counties containing big cities such as Los Angeles, New York and Houston generate the highest dollar volumes of exports, the most export-dependent places tend to be relatively small, often rural or suburban counties whose economies are based on a single industry – or sometimes even a single company or plant.”

● “…of the 154 counties or county equivalents where exports accounted for more than a quarter of GDP last year, only 11 had populations above 100,000 and half had fewer than 25,000 residents, according to a Pew Research Center analysis of data compiled by the Brookings Institution for its “Export Monitor 2017”report.”

● “The most export-dependent place in the country was Hancock County, Kentucky, outside of Owensboro and across the Ohio River from Indiana. The county, with just 8,810 residents, produced $420 million in exports last year, equal to 55% of its total GDP. Nearly all of those exports were manufactured goods, with aluminum and other nonferrous metal products the dominant industry.”

● “Two other localities – St. James Parish in Louisiana and Posey County in Indiana – also relied on exports for more than half of their GDP. In 11 counties, exports represented between 40% and half of local GDP.”

● “In 17 of the 30 counties with the highest annualized real export growth rates between 2003 and 2016, the economic sector that contributed the most to that growth was mining, oil and gas extraction.”

On the policy front, going down the path of protectionist measures that threaten to restrict trade will limit opportunities and inflict economic damage on small businesses, small communities across the nation, and workers. And of course, in contrast, if the U.S. were to resume its global leadership role in reducing governmental barriers to trade, opportunity would expand for small businesses and workers across the nation, again including in small communities.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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