SEP @5 ’G@2 @3:G1PM OFFICE OF ADVOCACY Pit

SMALL BUSINESS
: God Sa RES E ARCH ; Selober 1997

Administration

meme SUMMARY

Small Business Share of Private, Nonfarm
Gross Domestic Product

1997, 77 p. Joel Popkin and Company, 1101 Vermont Ave., N. W., Washington, DC 20005
Completed under contract no, SBA HQ-95-C-0021

: Purpose Commerce, Bureau of Economic Analysis) arid Employee
Hi ‘ Benefits (U.S. Chamber of Commerce).
Estimates of GPO for smal! businesses (those

Gross domestic product (GDP) is the most , with fewer than 500 employees) and large firms were
comprehensive single measure of aggregate economic calculated for six major industrial sectors: mining and
Output. It is the market value of the total output of goods manufacturing; construction; transportation,
and sérvices produced by a nation’s economy. Gross communications and public utilities (TCPU); trade
"product originating (GPO) refers to the private industry (wholesale and retail); finance, insurance and real estate
sector contributions to the GDP. ; (FIRE); and services, For each industry, GPO is defined
” "The purpose of this study is to estimate what as the sum of its five major components of “value-
proportion of. total private, nonfarm GPO was produced added.” Value-added is the amount that remains after
_., by small business. and by large business for the period subtracting an industry’s intermediate inputs from its
1982-1992. The project extends earlier work performed gross output. The five major components of value-added
for the U.S, Small Business Administration by Joel are: (1) compensation, (2) net interest,
Popkin and Company that estimated the small and large (3) indirect business taxes, (4) capital consumption, and
; business share of private, nonfarm GPO for the period (5) profit-type income.
1958-1982, The procedures for calculating the estimates by
' : business size required numerous steps.’ The 1982-1987
Scope and Methodology estimates were calculated using the methodology
7 . developed for calculating the 1958-1982 estimates, This
The major sources of data used for the study included methodology could not be followed for the 1988-1992
Enterprise Statistics for 1982 and 1987 and the estimates because of a delay in the publication of one of
‘quinquennial economic censuses for 1982, 1987 and 1992 the more important data sources, the 1992 Enterprise
(U.S, Departrnent of Commerce, Bureau of the Census); Statistics, Additionally, two of the major industry
"and Statistics of Income for 1982 through 1992 (U.S. sectors—-FIRE and TCPU—were covered by the
* Department of the Treasury, Internal Revenue Service), quinquennial economic censuses for the first time in
*. Other data sources used for the calculations included 1992. Consequently, some of the methodology had to be
National Income and Products Accounts and Input- tevised and other data sources consulted, such as

Output Tables for 1982 and 1987 (U.S. Department of

‘This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts issued by ,
the Office of Advocacy U.S. Small Business Administration. The opinions and recommendations of the authors of this study do not
\ anecessarily: reflect policies of the SBA or any agency of the U.S. government, The administrator of the U.S. Small Business Administration
Office of Advocacy has determined that the publication of this periodical is necessary in the transaction of the public business required by law
"of this agency. Use of funds for printing this periodical has been approved by the director of the Office of Management and Budget.


SEP G5 ’G2 @3:01PM OFFICE OF ADVOCACY

Advogacy’s firm size data base, to produce the 1988-
1992 numbers.

i, The GPO estimates by business size were first
developed for the benchmark years. The benchmark
years correspond to the years for which quinquennial

 eeonomic, censuses are conducted. Two censuses have
been completed since the last set of GPO estimates by:
business size were released, 1987 and 1992: Once
‘business size shares for those benchmark years were
ealeulated, the remaining years were interpolated.

Highlights

_ ©. The share:of private, nonfarm, gross domestic
product that originated in small business was stable at 51
‘ péreent-in both 1982.and 1992, although it reached a level

of
52 percent during the 1985-1987 period, However, there
was More movement in the small business shares for
’ ‘individual industries than is indicated by the stability of
| the overall share.
© * During the 10-year period, construction was the only
tiajor industrial sector in which the smal! business GPO
. Share rose significantly. The small business share in
trade, FIRE, and services fell, and slight gains were made
by small bosinesses in TCPU and manufacturing and
mining.
© That the small business share of the private nonfarm
economy-remained stable during a period when the small
business share féll'in several industries stems from a shift
‘in the overall economy away from the large-business-
dominated mining and manufacturing sector and toward
the'smail-business-dominated services sector. Between
1982 and 1992, the overall share of private, nonfarm
GPO accounted for by mining and manufacturing fell
from 31.7 percent to 24.4 percent. At the same time, the
verall share

of services rose from 18.5 percent in 1982 to 25.0 percent
in 1992. Consequently, even though the share of services
being produced by small businesses in 1992 was srnaller
than in 1982, the services sector of the economy grew
significantly, helping to maintain the share of small
business output overall,

For further information about small business data
or research, consult SBA’s Web-sites at
sba.gow/ADVO/stats and sba.gov/ADVO/research,

Ordering Information

The complete report is available from:
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US, Department of Commerce

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(703) 487-4650

TDD; (703) 487-4639

Order number: PB97-180723
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