Can rising exports help us save our economic skin? Are smarter metropolitan-region strategies a part of any necessary game plan?
This is the case the Brookings Institution is presenting, and it makes some sense. We’re into a season of dire budget squeezes – federal, state and local. There’s a rising chorus of deep worry about fast-rising public debt.
But simply focusing on government cutbacks and shrinkage misses two crucial points:
First, there’s no substitute for new wealth that eventually yields the taxes that pay off debts, even massive ones. Second, just stimulating our domestic consumer economy isn’t going to do the trick. The time has come to be looking early and hard beyond our own borders in today’s global economy, focusing on every opportunity for expanded export markets.
And here’s where the Brookings economists see a first wave of exciting new opportunities. Middle-class consumption is literally exploding in Brazil, India and China. Last year those countries accounted for 8.4 percent of all middle-class consumption in the world; by 2020, Brookings estimates, the figure could well reach 26 percent.
So how does the United States exploit those export opportunities and the millions of new American jobs they might generate?
Already, U.S. exports support 11.8 million jobs nationally – 8.3 percent of the nation’s employment. But these jobs aren’t scattered randomly across the landscape. They’re focused in our metropolitan areas. In fact, the top 100 metros account for 62.3 percent of the manufactured goods we export, and 75 percent of exported services.
And little wonder. Metro areas are naturally our hubs of commerce and innovation – for clear reasons. With their universities, laboratories and venture capital resources, with the ideas and skills of experts in varieties of fields, they generate creative interaction – the seedbed of innovation that leads to new jobs, and most often, higher wages.
Among our top examples: pharmaceutical companies in northern New Jersey that pay on average $105,213 a year, computer manufacturing in Silicon Valley ($114,053), airplane manufacturing in Seattle ($81,004) and film production in Los Angeles ($94,952).
And the rewards spread down the income chain: Workers with limited education and skills also tend to earn better in export-oriented firms, Brookings reports in its new study, “Export Nation – How U.S. Metros Lead National Export Growth and Boost Competitiveness.”
Even before the recession, it’s noted, export sales were growing about four times as rapidly as the overall U.S. economy. Four metros – Houston, New Orleans, Portland, Ore., and Wichita, Kan. – actually doubled their exports between 2003 and 2008. “These trends prove U.S. manufacturers can compete globally,” says Jonathan Rothwell, one of the Brookings report authors.
So what’s to hold us back?
The federal government does need to move forward more aggressively on stalled international trade agreements and issues such as the exchange rate of the dollar – keys to fulfilling President Obama’s call to double exports in the next five years.
But Washington can advance the game by connecting, especially through the Commerce Department, the country’s global trade vision to the metros that actually generate our export possibilities.
And for this to work, suggests Brookings’ Bruce Katz, the metros themselves “must make exporting a signature element of their economic planning.”
A leader on that account has been the Seattle region, home to such mega-exporters as Boeing and Microsoft. The Trade Development Alliance of Greater Seattle works on close ties with federal decision-makers and for years has launched major trade and urban study missions to cities around the world.
“Every U.S. metro now needs a strong global strategy, with the federal government helping us to pull jointly, not separately,” says William Stafford, the Trade Alliance’s president.
And while “newer” areas of America’s South and West often seem more trade-oriented, the country’s struggling “Frostbelt” areas can be and are serious export trade winners. Measuring exports as part of a region’s total economy, the top 12 regions include Youngstown and Toledo in Ohio, Indianapolis, Ind., Grand Rapids, Mich., and Baltimore.
And there may be more, spreading benefits to come. Suniva, an Atlanta-based maker of high-efficiency solar cells, was formed by Ajeet Rohatgi, an Indian-born scientist, at Georgia Tech. It’s received nearly $1 billion in orders from Indian and European solar module makers.
But now, with a prospective $141 million loan guarantee from the U.S. Energy Department, Suniva is poised to build a 500-worker plant near Saginaw, Mich., one of America’s hardest-hit recession areas. The company is claiming the plant will literally quadruple its exports over the next five years. Talk about new American wealth creation where it can matter the most!
Bottom line: The time seems ripe to connect smarter, aggressive national trade policies with the economic imperatives of metropolitan America. Or as Brookings’ Emilia Istrate puts it: “smart, game-changing policies” that “connect the macro to the metro.”
Neal Peirce’s e-mail address is nrp@citistates.com.
