OTTAWA, Ont. — Small businesses contribute much more to exports than previously believed, according to a new report by Industry Canada.
While exports are a vital part of the Canadian economy, accounting for about 40% of Canada’s Gross Domestic Product (GDP), the contribution of small businesses to exports has usually been perceived as very low.
Part of this perception is a result of the way export data has been reported. Before 2001, export data was reported by size of exports, not size of firm. Small exporters were defined as “firms that export less than $1 million annually” and they contributed 1.6% to the value of exports in 2001.
The new Industry Canada report, however, has constructed exporter profiles by firm size, which represents a very different picture. The new exporter profiles in the report show that 85% of Canadian exporters are small businesses (businesses with fewer than 100 employees). More importantly, the report shows that in 2002 small businesses accounted for 20% of the total value of exports, much more than the 1.6% share of small exporters.
Medium-sized businesses accounted for 16% of total export value and large business for 64%.
“The average value of a small firm’s exports was $2.3 million in 2002. Clearly, small firm does not equal small exporter,” Industry Canada commented in its Small Business Quarterly publication, which published the survey results.
Nevertheless, the proportion of small business exporters is less than their proportional share in the overall economy. The percentage of small businesses participating in exporting is 1.4%, compared with 37.7% for large firms.
“Consequently, there appears to be potential for increasing the number of small businesses that export, and thereby, their share of the total value of exports,” Industry Canada comments.
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