Panel Chair’s Lead-off Strategy for Reinvigorating Economic Growth

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METI-RIETI APEC Symposium on Small and
Medium Enterprises:
Strategy for Reinvigorating Economic Growth
with Dual Engine: SME and Asia-Pacific
October 1, 2010, Gifu
Panel Chair’s Lead-off
Ryuhei Wakasugi
Professor, Kyoto University
Research Counselor, RIETI
R. Wakasugi
1
SME in the Japanese economy
• Definition:
– Manufacturing: less than 300 employees
– Whole sales and services: less than 100 employees
– Retail: less than 50 employees
• Share of SMEs in the Japanese economy (2006) (%)
# of firms
# of
Employees *
Value added
(2008) *
Manufacturing
99.6
74.2
54.4
Whole sales
and Retail
99.6
79.0
* Small and medium business establishment basis
R. Wakasugi
2
Global shock wave to SME’s activities
R. Wakasugi
3
Lehman Shock, Greek Crisis, and after :
Low growth of OECD countries and
High growth of emerging economies
4
Heterogeneous growth rate in APEC member
countries after the financial crisis
R. Wakasugi
5
Internationalization of SME
Export ratio (Electric machinery, 2005)
Direct export Indirect export
Total
SME
36.7
16.3
53.0
Large firms
37.5
14.5
52.0
R. Wakasugi
6
Motivations of SME’s
internationalization
Confidence
Overseas Customers
R. Wakasugi
source:2010 White Paper on Small and
Medium Enterprises in Japan
(provisional translation)
7
Global network for SME’s
internationalization
Internationalized firms
Domestic firms
Relation with foreigners
No relation
with foreigners
source: 2010 White Paper on Small and Medium Enterprises in Japan (provisional
translation)
R. Wakasugi
8
Preparation for internationalization
Before internationalization
After internationalization
Market information
Sales network
source: 2010 White Paper on Small and Medium Enterprises in Japan
R. Wakasugi
(provisional translation)
Productivity/
Low cost
9
Critical information for
internationalization
Preference
and needs
Reputation and
Evaluation
source: 2010 White Paper on Small and Medium Enterprises in Japan
(provisional translation)
R. Wakasugi
10
Productivity of SME
R. Wakasugi
11
SME with high productivity still
non-internationalized
Probability density
Exporting firms
FDI firms
Domestic firms
Exporting and FDI firms
ln (Labor Productivity)
source: 2010 White Paper on Small and Medium Enterprises in Japan
R. Wakasugi
(provisional translation)
12
SME’s high productivity by exporting
Exporting firms
Non-exporting firms
source: 2010 White Paper on Small and Medium Enterprises in Japan
R. Wakasugi
(provisional translation)
13
SME’s high productivity by conducting
FDI and overseas production
FDI firms
Non-FDI firms
source: 2010 White Paper on Small and Medium Enterprises in Japan
(provisional translation)
R. Wakasugi
14
Job creation by SME
R. Wakasugi
15
Smaller layoff of SME
after the financial crisis
Yes
No
source: 2010 White Paper
on Small and Medium
Enterprises in Japan
(provisional translation)
R. Wakasugi
16
Higher priority of SME to the
maintenance of job opportunity
source: 2010 White Paper on Small and Medium Enterprises
in Japan (provisional translation)
R. Wakasugi
17
SME’s encountering difficulties
R. Wakasugi
18
Financial constraint for SME
Financial institutions
SME
Timely lending
Low interest rate
Long-term loan
source: 2010 White Paper on Small and Medium
Enterprises in Japan (provisional translation)
R. Wakasugi
19
Timely financial support to SME’s job creation
Finance for keeping operation
source: 2010 White Paper on Small and Medium
Enterprises in Japan (provisional translation)
R. Wakasugi
20
Human resources for SME
Aging
owners/managers
source: 2010 White Paper on Small and Medium
Enterprises in Japan (provisional translation)
R. Wakasugi
21
SME in the global economy
• Participation in the division of labor and offshoring in the
global economy
• Export and FDI of SME cause higher productivity, job
creation, profitability and growth
• Entrepreneur to create innovation and new business
• Creation of job opportunity in the local market
• Suppliers of diversified goods and services to the wide
rage of customers from high income level to BOP(Base
of the economic pyramid)
• Driving force to the agglomeration and growth in the
local economy as well as the global economy
R. Wakasugi
22
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