Global Managerial Economics Essay

4394 Words Mar 29th, 2015 18 Pages
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Global Managerial Economics
The small and medium-sized enterprises (SMEs) form a crucial part of the U.S. economy. The SMEs create the most jobs in the country; they target the ordinary Americans for employment thus making them a very important component of the economy. Without the SMEs, the economy will bleed millions of jobs, adversely affecting the economy. This is the reasoning behind the drive by President Obama to give this sector newly acquired impetus and promote it to create more jobs for Americans and grow the economy. The target of the National Export Initiative (NEI) is to boost the export capacity of the SMEs in the U.S. by supporting them; the administration reasons that this will result in
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The support from banks and financial institutions is not good; this makes it hard for the SMEs to obtain the finances they badly need to grow the businesses and expand their operations to include exports. This is the case especially since most of the SMEs are startups and lack enough collateral, banks consider than higher risk compared to the larger corporations (Mauro and Shah, 35). The community banks that might be willing to support the SMEs often lack familiarity with exporting and what it entails.
The U.S government regulation poses another challenge to the SMEs prospects of participating in the export market. The process that is involved for a firm to be allowed to make exports is lengthy and cumbersome and involves much paperwork; the process is also costly, taking it out of reach for the SMEs. It is difficult to obtain visas that are crucial in the export business; to bring in potential customers or partners to view the local operations of the firm, or to bring in employees for training. This makes it hard for the SMEs to grow in the business. The tariffs charged on imported intermediate input goods that might be needed by the SMEs for their production are prohibitive (Mauro and Shah, 76).
Other domestic barriers include high-transport costs. Port bottlenecks when trying to export and container shortages. The lack of economies of scale within the SMEs limits their

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