This volume consists of a report of the President concerning the state of small businesses as well as the U.S. Small Business Administration annual report on small business and competition. Addressed in the President's report are the following issues: the role of small business in the economy; the foundations of small business policy; and problems and policies of particular interest to small business (including cyclical sensitivity, inflation, interest rates, access to capital, tax incentives, regulation, antitrust, federal procurement, export, and a small business data base). The U.S. Small Business Administration annual report consists of four chapters and seven appendixes dealing with various topics, including small business in the U.S. economy, current and historical trends in the small business sector, financial developments in the small business sector, the effect of federal policy on small business, the Small Business Data Base, as well as other sources of business information, minority-owned and female-owned businesses, small business provisions of the securities laws, analysis of the Economic Tax Recovery Act of 1981, federal procurement for small businesses, and federal agency small business offices. (MN)