Who causes SMEs to suffer? An empirical analysis on the trade of SME products in Japan

Abstract

This paper aims to investigate the structure and the determinants of the trade of products manufactured by smalland medium-sized enterprises. For this purpose, a trade database for selected SME-based industries is prepared. Analyzing this database, the following three findings are obtained. First, firms in SME-based industries are facing a large inflow of imported goods, while the volume of their exports is relatively small. Secondly, the share of Asian countries is larger in the trade of SME products than overall trade. Thirdly, the gravity model can be applied for the trade of SME products. In some cases, distance and difference of income level tend to be more sensitive for SME products than overall trade. These results are consistent with the labor-intensive characteristics of SME products.