Exports as a Regional Growth Strategy

5.6.2012 | If “plastics” was once the buzzword for hopeful young graduates in 1967 (at least by “The Graduate” standards), today’s buzzword is  ”exports” –or so some regional planners are hoping. Export growth jumped 11% in 2010, and demand for new products is growing sharply in Asia and Latin America in particular.

But there’s some work to be done first. According to the U.S. Department of Commerce, just 1% of American firms sell a product or service outside of the U.S. And, according to the Brooking Institution, many states and metro areas have underplayed their export card in economic development plans.

To help regions devise stronger export plans, the Brookings Institution’s Metro Policy Program, in collaboration with the Rockefeller Foundation, has created a “ground-up collaborative effort” to help regional civic, business, and political leaders build and promote an export plan. Brookings is currently working with four metro regions to create and implement customized metropolitan export plans: Los Angeles, Minneapolis-Saint Paul, Portland, and Syracuse.

According to the project’s website,

These localized export plans will apply market intelligence to develop better targeted, integrated export-related services and strategies to help regions better connect their firms to global customers, as outlined by their individualized export goals. These MEPs will also lay out the kinds of state and federal reforms needed to support the effective implementation of such plans. Ideally, these export plans would also be elements of broader regional economic strategies.

Not only will export plans help develop new alliances and, with hope, spark further regional development, but BRR research has found that those metro areas with strong and diversified export industries (both state-to-state and internationally) are more resilient to economic and other shocks. In a rigorous analysis of data coupled with several case studies, BRR members Edward Hill and coauthors find that:

“Having a large number of major export industries makes a region less likely to experience a downturn in both employment and gross metropolitan product, suggesting that the less concentrated the export sector (that is, the larger the number of industries that are major exporters) the more protected the region is from economic shocks.”

Exports, however, did not necessarily speed the recovery from a shock once it hit.

The Brookings’ project’s export plans are tailored to local regional strengths. The Minneapolis/St. Paul plan, for example, identifies shortfalls and potential among the metro area’s large and small businesses. Despite being home to global companies, such as 3M, Cargill, General Mills, and Medtronic, the region isn’t tapping its full export potential, an assessment revealed.

The plan identified the key export areas and current trade focus (in this case NAFTA countries). It also identified barriers to greater exports, including a lack of understanding of the export market; a relatively fragmented group of exporters; and a reluctance on the part of small and medium-sized businesses to explore exports. Leaders are now working from this new plan to double exports by 2017. The plan in more detail is available here [pdf].

Plans such as these are critical to smart regional planning and growth. Today, the majority of U.S. firms are not ready to capitalize on the growing purchasing power in other countries. Yet the world is projected to add another 2 billion people by 2050, and with them a growing middle class will emerge.  They will want new things–products and services that U.S. cities could provide. Regional development will surely want to tap this potential.

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