Common wisdom is that for the United States to increase its exports, it needs to increase the number of exporters. And since most current exports are made by the largest companies, the Department of Commerce has argued that we need to increase exports by small and medium companies.
A recent study presented at the World Bank, and reported yesterday by the Washington Post, suggests that this strategy may be doomed to failure. According to the study,
Big companies grow bigger and export because they are already successful; they don’t become successful and large because they export.
Of course, seasoned exporters probably snicker at the concept of encouraging Mom and Pop companies to start exporting given the complexity of export regulations, the overwhelming costs of compliance, and the massive penalties imposed by State, Commerce and Treasury (not to mention criminal prosecutions) on companies that don’t get every last detail right. Part of the reason why exporting is principally a pastime of the big boys is that they are the only ones who can afford to pay the costs and run the risks involved. For those who can’t, better (and safer) to sell your widgets to people in Muncie and Peoria.
Copyright © 2013 Clif Burns. All Rights Reserved.
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