The internationalisation of Spanish SMEs: main developments and their determinants

The buoyancy of Spanish exports in recent years largely reflects progress in the internationalisation of our productive system. The marked prolonged weakness of domestic demand during the past recession spurred a search for new markets, against a background in which the moderation of labour costs, and subsequently of financial costs, strengthened the competitive position of Spanish firms.1 A knowledge of the characteristics of the firms behind the recent enlargement of the Spanish economy’s export base provides important information on their possible future performance. The latest evidence available is that SMEs are participating significantly in the enlargement of the export base2 and in the geographical diversification of exports. Technological and logistic advances and the deregulation of trade have reduced export costs also for firms of this type, although, on average, their lower productivity and higher borrowing costs continue to hinder their penetration of and sustained presence in foreign markets. The purpose of this article is to identify the main features of the process of internationalisation of SMEs in recent years and to ascertain what factors determine their propensity to export. The rest of the article is organised as follows. Section 2 describes the databases used and analyses the contribution of SMEs to the recent behaviour of exports. Section 3 estimates the factors that raise the likelihood that SMEs will export and drive their geographical diversification. Finally, conclusions are drawn.