Knowledge is power, the saying goes, and the truism holds for exporting goods and services. Without a keen understanding of export data and regional economic strengths and weaknesses it is difficult to craft a regional economic development strategy truly tailored to local conditions.
Brookings’ Export Nation report and data series is designed to catalyze and enable more metro areas to make exports a top economic development priority. It is the only source of metro area export data that is based on point of production and that covers services sectors, enabling local practitioners to understand what their region trades with the world. Previously, metro areas had no way to grasp what they produce locally and trade globally, leaving them ill equipped to develop fact-based strategies.
The just-released Export Nation 2013 report reveals that exports have played a central role in the on-going U.S. economic recovery, particularly in the top 100 metro areas. Exports accounted for 37 percent of U.S. output growth from 2009 to 2012 and 54 percent in the 100 largest U.S. metro areas. Yet the data also reveals a metro export landscape characterized by uneven performance (export intensity in the top 100 metros ranges from below 5 percent to over 30 percent) and missed opportunities.
This should, and has started to, inspire metro area leaders to create export plans that build on their market knowledge and distinctive strengths.
In port and border metros, such as Charleston, San Antonio, San Diego, and Los Angeles, localized export data is helping metro officials to better understand what is actually produced in the market, in addition to what is shipped through it. It is expanding the local definition of exports to include both logistics and production and enabling a renewed focus on traded sectors.
Local export data also enables highly specialized metros to identify opportunities to diversify their industry concentrations, or clusters, in tradable sectors, typically manufacturing and high-end services. Like Detroit with autos and Seattle with aircraft, Export Nation revealed that Portland’s export economy is anchored by a single major industry with strong connections to global markets. The computer and electronics sector drives 67 percent of total exports in Portland and gives the metro one of the highest rates of export intensity. But volatility is another outcome of high industry dependency. Computer and electronics exports declined from 2011 to 2012, and Portland fell to 96th out of the 100 largest metros in total export growth. In response to this on-going threat, Portland’s export plan focused on intentional steps to both strengthen its core export industry and diversify its export economy. The first step in diversifying is “We Build Green Cities,” a branding strategy (supported by good data) which highlights Portland’s strengths in the green building, clean tech, and urban planning sectors.
Most metro areas, however, don’t have an easily identifiable core of dominant firms in highly traded industries. The largest exporting industry in many large metros, including Minneapolis, Chicago, and Atlanta, produces less than 15 percent of total local exports. These large metro areas also often exhibit strengths in services exports, presenting new ways of thinking about export potential. In this sense, Minneapolis, with its diversified goods and services economy and presence of large global company headquarters, lies at the opposite end of the spectrum from Portland. While export-intensive Portland is working to diversify its export base, more diversified Minneapolis, ranked 54th in export intensity, is identifying and organizing tradable sector clusters and working to market those strengths to the world, beginning with a cluster around health and medical technologies.
The different strategies of the metro areas that are placing a new focus on exports are a response to their different starting points. That’s why Export Nation updates are slated to be released annually for the next four years, providing local leaders (and national and state leaders whose trade goals depend heavily on strong metro performance) with annual updates on the local industries that hold the most potential to make regional economies more globally competitive. By taking good data on traded sectors into account and making exports a mainstream part of economic development planning, metro areas will be better positioned to succeed in the 21st century economy.