1. Using the Internet to promote services exports by small- and medium-sized enterprises
- Author:
- Joshua Meltzer
- Publication Date:
- 02-2015
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- SMEs are the main drivers of U.S. employment, and the majority of the employment is in SME services firms. Services are also a growing portion of U.S. exports. U.S. services exports are 34 percent of total exports. Including services used in the production of goods for export increases services exports to 50 percent of total U.S. exports. The U.S. runs a services trade surplus and has a competitive advantage in high-skill, high-paying services. The U.S. trade surplus in 2013 was $213 billion. Services exports supported 4.2 million jobs in the U.S. in 2013. Services SMEs are under-represented in U.S. exports. Only 5 percent of high-skilled services companies export, compared to 25 percent in the manufacturing sector. The global growth in Internet access is providing new opportunities for SMEs to export services to customers globally. The Internet also gives SMEs access to services as inputs, which increases the productivity of all SMEs and their ability to compete in overseas markets. Export Promotion Agencies (EPAs) assist SMEs to export. However, EPAs have not developed a comprehensive approach that takes full advantage of the opportunities the Internet provides for growing SME services exports. Some countries have developed new ways to use the Internet to assist SME exports. For example, in the U.S., businessusa.gov collects on a single website relevant trade data and provides information on the export assistance provided by various government agencies. In the U.K., opentoexport.com provides trade data, information on exporting and opportunities to blog and interact with experts. Matchsme.com in Denmark goes further and connects local businesses with local service suppliers. Connectamericas.com is also focused on Latin America and uses the Internet to match customers and suppliers. These different approaches and their successes provide insights into how to scale up an online program that could have a significant impact on SME services exports. The following are the main elements of such a program: Develop an Internet platform. Such a platform would connect services SMEs with overseas buyers and facilitate the transaction through to the export and payment. Build public-private partnerships. The Internet platform should involve the government and the private sector, drawing on their respective expertise. Develop trust in the Internet platform. This is needed if the platform is to succeed. There are various ways to build trust. This could include developing a rating system that is accepted across borders and incorporates into the platform existing trust-building mechanisms. Give services SMEs access to better information. The Internet platform should include all relevant information for services SMEs, including trade data, timely and relevant information on markets, barriers and regulations. Develop online networking opportunities. The Internet platform should allow services SMEs to meet customers and suppliers online. This would also increase the flow of timely information amongst participants on the platform. Such networks can also be used to vet potential business partners, thereby building trust in the Internet platform. Improve access to finance. A lack of finance is a barrier for services SMEs going global. An Internet platform should include information on financing opportunities and innovative financing approaches such as crowd funding. Create opportunities for soft landing in export markets. The ability for services SMEs to have face time with potential customers remains important for achieving export success. An Internet platform could build on the approach of CDMN in Canada and give SMEs opportunities to spend time overseas in start-up incubators or building contacts.
- Topic:
- Development
- Political Geography:
- Latin America