Role of Small and Medium Sized Enterprises in Developing Economies and Evaluation of Export Issues in Small and Medium Enterprises in Global Markets Case Study (with special reference to Export SMEs in Homagama Divisional Secretariat in Sri Lanka)

Abstract

Small and Medium Enterprises are a major source of job creation and economic growth. Global trade increases the domestic competitiveness and increase sales potential of existing products. It is important SMEs to participate and contribute to international operations because 80 percent of the industries are small and medium enterprises in developing economies. When it comes to export SMEs, we should develop export small and medium enterprises as they have direct impact on economy of the country. The survival and economic growth of the future nation depends on not only the independent self-sufficient economical & social environment, also it is important to understand that depends on international trade

International trade is a process of exchanging capital, goods and services across countries. Trading globally enhances the domestic competitiveness and extends the sales potential of existing products. In developing world, large firms, with sufficient capital, market base information, access to modern technology and infrastructure facilities are successful in participating in international trade whereas Small and Medium scale Enterprises (SME) face many challenges in international trading. There is a necessity of participating Small Medium Enterprises to international trade to increase exports income and reduce trade deficit in economy

In the current globalizing world and its market opportunities, the SMEs have started to face two main challenges. First, the need to constantly transform themselves and increase their individual competitiveness, and second, the need to enter cooperative relations with other SMEs to take advantage of their synergy effects. As a solution to these challenges, there is an emerging interest in the creation of SME clusters to improve their competitiveness and success in business. SMEs in developing economies need to reach international markets and be a part of Global Value Chains to improve their businesses as well as improve the local economies

Trade liberalization increases allow established foreign enterprises to easily take over remote and underdeveloped markets, making it hard for SMEs to succeed either in local or global spheres. To overcome these issues, it is needed both to recognize the obstacles that SMEs face when trying to go international as well as what are solutions to these issues.

According to previous research, in developing economies, large firms, with sufficient capital, market base information, access to modern technology and infrastructure facilities are successful in participating in international trade. However, it is yet a challenge for small and medium scale enterprise (SME) to engage in international trade.