Report Finds Exports From U.S. Metros Are Key to Growth

A Brookings Institution's Metropolitan Policy Program study of U.S. exports between 2003 and 2008 found that export-based businesses accounted for 8.3 percent of U.S. employment and higher wages than domestic-oriented industries. During that period, the country's 100 largest metropolitan areas produced about 64 percent of U.S. exports, including about 75 percent of the nation's exported services. Since the Obama administration has made increasing U.S. exports a national goal, the report recommends working with metro regions to create strategies that help develop their export economies through collaboration with local organizations and leaders.

The report, Export Nation: How U.S. Metros Lead National Export Growth and Boost Competitiveness, identifies exports as a key creator of jobs and economic growth at both the national and metro level. In 2008, a U.S. Department of Commerce report found that 10.3 million U.S. jobs were associated with exports. These jobs pay wages that are, on average, 11 percent higher than non-export jobs. The authors suggest that by increasing U.S. exports, the country could significantly decrease its trade deficit over time. Since a majority of export jobs and industries are centered in metro areas, with regional export economies varying greatly between metros, the report uses metros to track export growth across the U.S.

Using the 2003-2008 data, the authors find that export growth is correlated with the growth of the metro manufacturing industry and with local patenting rates. The study identifies the San Jose-Sunnyvale-Santa Clara, CA, metro area as the region with the highest percentage of jobs from exports (22.7 percent) in the country. Silicon Valley is host to the highest patenting rate per capita in the country. Both exports and patenting in the region are driven by its computer and electronic industry, which represents 70 percent of San Jose's export related jobs. Wichita, KS, has the highest percentage of exports as a share of gross metropolitan product, due largely to its transportation equipment manufacturing industry.

In his 2010 State of the Union Address, President Obama set a goal to double U.S. exports over the next five years, creating an estimated two million new jobs. The administration's National Export Initiative would support farmers and small business owners increase their exports by increasing their access to financing through the Export-Import Bank, signing favorable international treaties and trade agreements, and offering assistance through the Foreign Commercial Service. The doubling of exports within a five-year span, however, is a rare occurrence in U.S. economic history, according to the Brookings report. That rate of growth only has been achieved three times, the latest being the post-war period of 1944-1949.

Out of the 100 U.S. metros studied by Brookings, only four managed to double their exports during the 2003-2008 period. Houston doubled metro exports thanks largely to its chemical sales. Witchita did so based on the regional aviation industry. Portland doubled metro exports led by the computer and electronics industry, and the oil refining industry helped New Orleans increase exports during an otherwise devastating time for its economy. The 100+ percent gains in these four metros are impressive, but far outpaced exports elsewhere in the country: U.S. overall grew by only 46 percent during the same period.

The authors make several suggestions for how the administration could increase export growth and how the federal government and U.S. metro regions could work together to boost local export industries. On the macroeconomic scale, the report recommends that the U.S. government push to open new markets with trade agreements that level the playing field for American companies. Second, the administration should continue to increase federal R&D funding, in order to keep commercializing new products and to improve the quality of U.S. exports. To spur export growth at the metro level, the report recommends:

• Use the National Export Initiative to collaborate with local public and private partners, including state and metro leaders at all levels of the initiative and targeting funding to strategically assist metros based on the local economy;
• Develop individual metro export initiatives run by local stakeholders to create and implement metro export strategies;
• Create a National Freight Transportation Plan to reduce the cost and times of shipping; and,
• Provide more granular data about metro exports through the U.S. Census and Bureau of Economic Analysis.

Two additional reports highlight how metros in the Great Lakes region and the Intermountain West can develop effective export strategies.

Read Export Nation: How U.S. Metros Lead National Export Growth and Boost Competitiveness and the other reports at: http://www.brookings.edu/metro/MetroExports.aspx.