A new report from the Brookings Institution suggests that exports may provide a pathway to high-impact growth for SMEs, which often struggle to grow otherwise. Currently, only 4 percent of all U.S. firms export to international markets, but the Brookings report argues that American products have the potential to be internationally competitive. Despite the potential benefits, many SMEs shy away from exportation mostly because of the following factors:
- Lack of awareness about the types of finance programs available to companies
- Lack of necessary support from large financial institutions
- Inability to access capital due to SMEs’ size and perceived risk
The report suggests that state governments are well-positioned to help SMEs overcome these obstacles to exporting goods and services. State-level governments, the report argues, are the best facilitators for promoting exports from SMEs because states are more flexible than the federal government and can prioritize programs that suit regional industries and strengths.
To help SMEs looking to export products, the report argues that state governments should:
- Raise awareness among financial institutions and SMEs about the current national and regional programs that support SMEs looking to export
- Implement additional financial instruments that help relieve constraints on capital for SMEs interested in trading internationally
- Create new financial entities that focus on providing SMEs with the capital to export
To read the full Brookings report, please click here.
Contributed by Emily Luepker.