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The influence of the European single market upon the SME activity

Author

Listed:
  • Pirtea, Marilen
  • Milos, Marius Cristian
  • Iovu, Laura Raisa

Abstract

The analysis tries to highlight the manner in which the European common market will influence the SME activity in Romania. The challenges caused by regionalization and globalization of markets demand the compliance of SME to the competitive environment, by consolidating their market position and benefit from the economical opportunities. Romanian SME could become an economical growth vector only if the real capacity to adapt to a global competition and knowledge based economy is proved. Regarding this aspect, the authors try to present the most important positive and negative effects on the SME activity. Presently, the small level of competitiveness is due to the lack of necessary capital for supporting investment projects, but also to the constraints of financial sources. The study reveals the importance of SME in an economy and the Romanian SME capacity of overcoming the difficulties of entering a strongly competitive market. Romania has a SME sector which, although has recently followed a positive trend, it possess performances which are still low in comparison with the countries from European Union, including the countries which entered the European Union in May 2004. The branch structure of Romanian SME is still one specific to a less developed country: industries that use a high level of labor force and that has a competitive advantage related to the small cost of this factor; a small proportion of the tertiary sector; and an increased presence of the SME that have as principal activity commerce (2 times bigger than the European average). SME sector contribution to economical growth is well known in the majority of the countries of the European Union. If traditionally, small and medium enterprises were considered economical operators belonging to the internal market, today a growing number of SME are managing to conquer the global markets. Approximately one fifth of the SME involved in the productive activity in the OECD countries realize a proportion of 10 to 40 % of their turnover from international activities. SME contribute in a high proportion to the global industrial exports and increase the volume of foreign direct investments worldwide. Moreover, the European Union experience show that it has a significant contribution to the GDP and to the reduction of the unemployment rate.

Suggested Citation

  • Pirtea, Marilen & Milos, Marius Cristian & Iovu, Laura Raisa, 2007. "The influence of the European single market upon the SME activity," MPRA Paper 12970, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:12970
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    File URL: https://mpra.ub.uni-muenchen.de/12970/1/MPRA_paper_12970.pdf
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    More about this item

    Keywords

    Competitiveness; SMEs (Small and Medium Entreprises); single market;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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