Very Small Manufacturers More Affected by Global Conditions

However small manufacturers in high-tech industries are more insulated from international competitive pressures than those in other sectors.

Currency exchange rate pressures lead to an increase in the exit rates of very small manufacturers
(fewer than 20 employees), finds a report recently released by the Office of Advocacy of the U.S. Small Business Administration.

"Interestingly, small manufacturers in high-tech industries are more insulated from international competitive pressures than those in other sectors," said Robert Feinberg, professor at American University and author of the paper.

The study, "The Impact of International Competition on Small-Firm Exit in U.S. Manufacturing, "focused on 1990 to 2004. The author noted little variation in the overall exit rate of small manufacturers over time, but a reasonable amount of variation across firm size and industry. Factors affecting exit across firm sizes included overall economic activity, labor costs, and whether the firm's industry sector produced consumer goods. Changes in an industry's import share produced mixed results across time periods and firm sizes.

For more information and a complete copy of the report, visit the
Office of Advocacy website at http://www.sba.gov/advo

TAGS: Trade
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