Three years into the National Export Initiative, and just as Brookings is primed to further scale up its Metro Exports Initiative (MEI) to meet rising demand, there appears to be growing skepticism in some circles about the prospect of embracing and promoting exports in the face of a potential global economic slowdown. The media, regional leaders, and other interested parties--all are questioning whether the European debt crisis, a slowdown in China, and the overall weakness of the economic recovery make this a poor time to prioritize and pursue exports.
Does it make sense for U.S. states and metro areas to become more intentional about exports when we might be heading towards a decline in global demand over the near term?
As of the most recent figures (first half, 2012) U.S. goods exports have continued to grow, including exports to China and Europe. So, at this point, the concerns are based primarily on speculation about the future or to recent declines in exports from certain states. But even if exports do slow down in the coming months, the clear answer is “yes,” it does make strong and logical sense for metro areas (and tradable sector companies) to develop and implement export strategies now--and stick with them.
States and metro areas should prioritize and focus on exports because in addition to potential short-term rewards (which often receive an outsized share of attention in economic development), an intentional exports effort is critical to long-term economic sustainability, growth, diversification, and competitiveness. The global economy runs in cycles and history teaches us to be prepared for the inevitable ups and downs. We are also likely to confront cycles where the U.S. domestic market (or certain industries) is relatively stronger or weaker than some other global markets. Exports provide a way to leverage and manage these cycles and better weather domestic downturns.
From 2008 to 2009, as a result of the global economic downturn, overall U.S. goods exports experienced an 18 percent decline. Should federal, state and local areas have reconsidered their focus on exports? Should U.S. exporters have stopped exporting then and focused only on the domestic market? If they had, they would have missed out on the 40 percent growth U.S. goods exports experienced from 2009 to 2011.
Exporting companies we interviewed as part of the MEI consistently stressed that if not for exports their revenues would have stagnated or declined over the past few years given the U.S. economic slowdown, likely resulting in job cuts. Through sales to emerging markets, such as China, Brazil and India, that continued to grow during the downturn, these firms were able to grow revenues (even as domestic revenues declined), maintain local jobs, and better secure their long-term futures through market diversification. Exporting firms also claim that engaging in markets globally positions them to be more competitive and prepared to confront moves by foreign firms into the U.S. market, so exporting can also be viewed as a strategy to defend your home turf.
Earlier this month, Brookings released “Ten Steps to Delivering a Successful Metropolitan Export Plan.” This brief serves as a how-to guide for metro area leaders who are interested in developing effective export plans customized to their region’s unique assets and capabilities. It is designed to capture and widely share what was learned over the past year through metro export plans developed jointly with four U.S. regions: Los Angeles; Portland, OR; Minneapolis-Saint Paul; and Syracuse/Central NY. The “Ten Steps” guide and the four export plans serve as tools to help metro areas navigate this area of job growth thoughtfully and effectively.
The world is changing rapidly and exports serve as a good entry point for U.S. states and metro areas that desire to restructure their orientation to the world and ensure they are taking advantage of global opportunities on multiple fronts. A more comprehensive regional economic development effort that includes exports, and an increasing focus on international trade and investment, is critical to metropolitan long-term economic growth and sustainability.