International Trade and Global Business

 

Metro Areas and Exports

The Brookings Institution, a Washington, D.C. think tank has this thought:  Future increases in U.S. exports will depend on how well cities marshal and manage their competitive advantages.

None if this may be news but what is useful about the study released in early March is the prodigious data in support of the obvious:  cities or metro areas are the factories of our impressive export output.  http://www.brookings.edu/events/2012/0308_export_nation.aspx

The timing of the report is auspicious because the Obama administration has chosen to focus on export growth as a means of generating jobs and reducing the nation's toxic deficit, which threatens to become a giant blood-sucking squid on our collective faces.

Among the interesting data points are these:
  • - 100 metro areas generated 84 percent of U.S. exports in 2010
  • - Exports grew 11 percent in 2010, the fastest clip since 1997
  • - Jobs supported by exports grew 6 percent in 2010, while the overall economy was losing jobs.  52 percent of the jobs were directly supported by exports with the rest created by suppliers to the export sector and the hauling of merchandise.

The report presents a mostly familiar stew of recommendations. They include a merging of some federal export promotion programs to improve efficiency; the Feds should enable local efforts by better coordinating federal and local export promotion efforts; provide more funding to programs that steer money to SMEs via state governments for helping qualified businesses generate export sales by attending overseas trade shows and governor-led trade missions, as well as receiving instruction on the export process.  The report’s authors also urge the federal government to provide more and better data on metro export performance so that the cities can better measure their progress.

Brookings seems to want to be a think/do tank and is working with four metro areas to help create export plans.  This may end being the most useful part of the whole effort. The metro areas involved in the pilot are Portland, Oregon, Syracuse, New York, Los Angeles, and Minneapolis-St. Paul.  Reports from Portland indicate that organizational meetings are just underway, so it will be awhile until we know whether more attention paid by more actors to furthering a strategy for increasing exports will work.

The assumption seems to be that the addition of German-like precision in organizing and focusing efforts will work at the level of our cities. But there are two flaws here.  First is that the German export model is mostly top down, not bottom up as advocated by Brookings.  Second is the absence of a discussion that exports need markets and building more things and selling them to the world works as long as there's sufficient wealth elsewhere to purchase them. As the report shows, 25 percent of our exports go to Canada and Mexico.  Yes, the share of export to BRIC countries--Brazil, Russia, India and China--is growing.  But at only 3 percent of the total, and with the BRICs notoriously difficult to do business with, it's not at all clear that these consumers will replace our hemispheric partners anytime soon.

So, yes, by all means recognize cities for the export engines that they are.  Encourage foreign investment and nurture industrial clusters.  Spend money on infrastructure, raise educational standards and spend public export promotion dollars more wisely.  All these things and others matter greatly.

At the same time, however, whether we remain an “export nation” (we already are the world’s #1 exporter if services are added to manufactured goods output) depends less on what metro areas do than what national governments do, including our own, to clean up their finances and promote growth.

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