About 95% of the world's  population live outside the US so why don't small businesses engage in global trade?  

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pohnpei397 eNotes educator| Certified Educator

First of all, there are many small businesses that do engage in global trade.  There are, for example, hay farmers in my area that sell their products to places like Japan.  However, it is true that small businesses are less likely to engage in international trade.  The reason for this is that there are serious costs involved in such trade.

In order to engage in international trade, firms need first to make contacts.  It is not easy for a small business to attract the attention of buyers in foreign countries.  In order to participate in foreign trade, businesses must typically also be able to produce in sufficient quantities to sell to the foreign countries.  Again, this is easier for big firms than for small firms.  Firms that sell goods to foreign countries must also arrange shipping for their products.  Large companies can typically do this more cheaply as they arrange for huge lots of goods to be transported.

In these ways, the costs of doing business with people in foreign countries can be higher for small businesses than for large ones, which makes Internet e-commerce a new advantage.