Federalism

Exports Can Grow Your State’s Economy

States are facing an increasingly international future, and since ninety-five percent of the world’s consumers live outside our borders, embracing export opportunities can be the key to a state’s economic growth.  No one understands this better than President Obama who launched a National Export Initiative in his 2010 State of the Union Address cautioning that “If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.”

The statistics support the President’s statement.  According to a report published by the Federal Reserve Bank of New York, the United States’ share of exports has declined from 12 percent in the 1980s and 1990s to 8.5 percent in 2010 despite an increase in the value of our exports.  This decline has occurred in both goods and services.   Many economic commentators attribute this in part to the growing network of trade and economic agreements to which the United States is not a party.

We have begun to remedy the problem.  Ratification of bilateral free trade agreements (FTAs) with Colombia, Panama and South Korea are indeed a very positive move in the right direction, and negotiations for the Trans-Pacific Partnership, a multilateral free trade agreement that will set the standard for future FTAs, are on track to be completed this year.  Now is the time for states to seize the opportunity to expand their exports.

Our nation has significant untapped export potential.  Only one percent of U.S. companies export with small and medium-sized businesses missing out on the potential revenues that would accrue from cultivating customers overseas.  Furthermore, an increase in American exports would likely result in more and better paying jobs in the states.  According to the CATO Institute, a libertarian think tank, export related jobs pay 15-18 percent above the average.  Most companies could benefit from an international component in their business plan.  Some firms, especially small to medium sized enterprises, find the prospect of exporting their products intimidating.

Additionally, many states have missed the opportunity to develop comprehensive international trade strategies.  This is vital if a state is to take advantage of the opportunities that international trade presents.  The good news is that many of these challenges can be remedied, as an article from the November/December 2011 issue of Inside ALEC “Trade Equals Jobs” illustrates. Trade Equals Jobs

There are numerous agencies and organizations to help a state get started including programs through the U.S. Department of Commerce as well as state-based NGOs such as World Trade clubs or centers.  The benefits of growing your state’s economy through international trade far outweigh any perceived challenges.


In Depth: Federalism

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