Manufactured exports grew rapidly during the 1970s, from US$59 million in 1970 to just over $800 million in 1980 (World Bank, World Tables. 1989-90 Edition, 186-87) or from 4 percent of manufacturing output to 10.4 percent. There was a sharp decline in manufactured exports in the early 1980s to a low of under $600 million in 1983, partly due to sharp increases in foreign exchange revenues during the late 1970s from drugs, higher coffee prices, and, to a lesser degree, fuel exports. These developments set the stage for an exchange rate appreciation which impacted negatively on other exports, including manufactures, and increased import penetration in the domestic market. The export low of the early 1980s was followed by fairly continuous growth (around 17 percent per year in current dollar terms) to over $1.5 billion by 1990.

In the 1950s and 1960s, growthwas fastest among the larger fimis and plants. During the 1970s, SME employment grew rapidly both in the aggregate and at the firm level, reversing the pattem of the previous several decades. Cortes et al (1983, Chapter 6) attribute this SME boom to a combination of availability of entrepreneurial skills, many of them honed through experience as employees in other firms; a fall in the real wage levels of both white and blue collar workers in the early 1970s; better access to imported machinery and raw materials; an effective local market for second-hand machinery (much of it imported); and an expanding domestic market as both employment levels and per capita incomes rose quickly. During the difficult 1980s there was an absolute decline in employment in plants of 200 workers or more, almost no change in those with 50-199 workers, and some increase in the smaller plants of 10-49 workers (Table 1).

Permanent employment in small and medium plants of 10-199 workers is about the same as in larger ones; their subcontracting activity is probably somewhat greater. Therefore, the total direct plus subcontracted employment is greater in small and medium industry than in large industry. Data for the 1980s indicate very little difference between SMEs and large enterprises in the share of output exported directly (8 percent vs. 10 percent in the late 1980s).2 The SME share of direct manufacturing exports was a significant 30-35 percent during the 1980s. If, as seems likely, a higher share of small firm production is exported indirectly than in the case of larger firms, the SME share in total exports would probably be at least 40 percent This prominent role follows in part from the prevalence of smaller plants in some of the more export-oriented industries such as gannents.

2 Direct exports are undertaken by the producing finr itself, as opposed to an intermediary. During the 1980s, the contribution of small plants to total exports rose markedly and that of medium ones fell. The export/value of production ratio for small plants jumped from 2.6 percent between 1981-83 to 11.2 percent from 198890, while that of medium plants stayed about the same, and that of the large ones also rose. By the end of the 1980s, small plants thus had the highest export ratio and minium-scale plants the lowest. (In these figures, small plants are defined as those with 1049 and medium as those with 50-199 workers).

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