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It has long been argued that sustainable growth amongst micro, small and medium enterprises cannot be realised in the Barbados market of 280 000 persons. Consequently, the CARICOM Single Market & Economy has been touted as an expanded market to be accessed by small firms, in addition to the wider CARICOM region of 15-member states and five associate members, representing 16 million consumers. The wider Caribbean, inclusive of French, Spanish and Dutch-speaking countries, provides further expansion with a market of over 44 million consumers. MSMEs must therefore be incentivised to internationalise as a deliberate strategy to grow their operations.
The geopolitical headwinds, supply chain disruptions and the general volatility in the global economy necessitate that the business models of small firms include export strategies as a rule, not an exception. In an increasingly globalised economy, remaining confined to a single domestic market will limit growth and competitiveness.
Internationalisation offers several advantages, such as:
• increased productivity
• cost efficiency through access to global resources
• enhanced brand visibility
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• greater resilience to market fluctuations
• accelerated innovation
• contribution to the home country’s economy through job creation and revenue growth.
The challenges to internationalisation will always be highlighted; however, these ought not to be a deterrent but provide the opportunity for innovation and collaboration among stakeholders. Navigating complex legal and regulatory environments, managing the high initial costs of expansion, recruiting specialised staff with international trade expertise, and adapting products and marketing strategies to different cultural and market expectations are all issues that can be addressed through policy and programmatic solutions.
Governments through appropriate bilateral arrangements and the strengthening of overseas missions; financiers offering trade finance and other relevant funding solutions; and trade promotion agencies providing the market intelligence and entry data, must work hand-in-glove to create an enabling environment and to incentivise small firms.
The data consistently and credibly shows that MSMEs are major employers in developing countries but remain limited in productivity and export performance. Direct exports account for just three per cent of MSME manufacturing sales, compared to 14 per cent for large firms, according to a World Trade Organisation report. Despite this gap, evidence shows that international trade can significantly benefit small businesses.
Data published in an IGC report revealed that exporting increases MSME profits and household welfare. A randomised controlled trial in one market matched small rug firms with foreign buyers. The impact was that profits rose for the small businesses by 16 – 26 per cent and household wellbeing improved, with a 24 per cent increase in food consumption—a proxy for improved living standards. The conclusion was that exporting benefited not only firms but also the families of business owners, making a strong case for policies that enable MSME exports.
The report also highlighted that MSMEs gained skills and boosted productivity through exporting as firms acquired new knowledge from foreign buyers and intermediaries. Exporting firms also improved product quality and production speed as internationalisation leads to lasting improvements in firm capability.
Research on the Caribbean and Latin American region by IDBInvest showed that MSMEs exhibited low levels of internationalisation compared to their counterparts in developed or other emerging markets. Export strategies were identified to enable resource reallocation to more efficient firms, facilitating learning and innovation, and promoting technology diffusion.
The report posited several common barriers to export trade experienced by small firms, including:
• Credit constraints due to limited collateral and financial products suited to their scale.
• Low innovation and weak human capital, stemming from inadequate coordination, knowledge asymmetries, and lack of skilled personnel.
• Organisational limitations, including traditional management structures and insufficient governance.
• Operational hurdles, such as unfamiliarity with export logistics, legal procedures, and international standards.
While these barriers exist, several solutions can be applied to alleviate these constraints, such as:
• Reduce matching costs by improving market access tools and buyer connections.
• Invest in trade facilitation to encourage “learning by exporting.”
• Strengthen export promotion agencies with clear mandates and long-term strategies.
• Support participation in global value chains to enhance skills and competitiveness.
By addressing these constraints, governments can enhance MSME integration into global value chains and unlock broader productivity and income gains across the economy.
The trade commissioner of Canada recently offered key reasons for that country’s support to the internationalisation of MSMEs as a deliberate strategy for economic growth.
More than 95 000 MSMEs in Canada are involved in exporting goods or services internationally, as this sector represents a significant part of Canada’s economy. The reasons posited for an aggressive exporting strategy include:
• Encourages innovation
Exporting companies tend to be nearly twice as innovative as those that do not export. Competing in global markets often pushes firms to improve their products, adopt new technologies, and refine their processes.
• Boosts sales and growth
Exporters generally earn more revenue, expand more quickly, and are better able to withstand economic challenges. This leads to stronger financial stability and long-term business success.
• Opens new markets
Since Canada makes up only about 0.5 per cent of the world’s population, the majority of potential customers are outside the country. Exporting helps MSMEs tap into these international markets—many of which are covered by Canada’s free trade agreements.
• Reduces risk through market diversification
Relying on just one domestic market can be risky. By exporting, businesses spread their risk across multiple markets, improving their ability to adapt and stay competitive.
• Strengthens brand value:
Canada has been successful in creating its own brand Made in Canada, which is an approach that should be considered for Barbados and possibly the wider Caribbean. Labels such as Made in Barbados or Made in the Caribbean will help to build trust and recognition in global markets.
The next step for MSMEs looking to expand internationally is to ensure that the needed resources are available, including funding, business supports and government programmes to assist firms in their export journey. These tools will help businesses to explore new markets, navigate regulations, and grow globally.
The Small Business Association of Barbados (www.sba. bb) is the non-profit representative body for micro, small and medium enterprises (MSMEs).
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