Early in 2010, with the U.S. economy struggling to produce output or jobs, President Obama devoted a portion of his State of the Union Address to “fixing the problems that are hampering our growth.” One of these problems, according to the President, was a lack of exports. The President linked an increase in exports to an increase in jobs, and pledged to double exports over the next five years.
Doubling exports, whether or not it happens in the next five years, would be a huge boon to most of the Great Lakes region’s largest metropolitan areas, bringing them thousands of good jobs and building on their existing strengths in the world economy. This report focuses attention on the benefits of exporting, and highlights the existing and emerging strengths, and some weaknesses, of Great Lakes metros in global trade.
Using newly developed information from the Brookings report “Export Nation,” this analysis of export activity in the 21 largest metros of the Great Lakes region for the years 2003 to 2008 reveals that:
- Exports support 1.95 million jobs in the largest metropolitan areas in the Great Lakes. Even after decades of decline in manufacturing employment, export industries (primarily manufacturing) still employ millions of people in the region, ranging from 398,000 in Chicago, to 240,000 in Detroit, to 20,000 in Des Moines, as of 2008.
- Great Lakes metros have some of the highest dollar volumes of exports and the greatest reliance on exports of any of the large metropolitan areas in the nation. Chicago and Detroit rank third and ninth, respectively, in total dollar export volume among top 100 metropolitan areas, and Minneapolis, St. Louis, and Indianapolis all rank in the top 20. Great Lakes metros also tend to export a greater proportion of their economic output than most large metropolitan areas.
- In general, Great Lakes metros with the highest levels of manufacturing employment are less innovative than their manufacturing oriented or export intensive peers. Nationally, metros that are manufacturing oriented or export intensive (or both) tend to create patents at much higher rates than other metros. But most Great Lakes metros underperform on innovation compared to their national peers, despite high levels of manufacturing employment and generally high export intensity. Only three of the 15 most manufacturing-intensive metros in the region, Detroit, Minneapolis, and Rochester, post above average patenting rates.
- The region’s metros lag the nation’s other large metros in terms of service exports and service export growth. Only Chicago and Minneapolis export more services as a share of total output than do the nation’s top 100 metros as a whole, and only four Great Lakes metros (Syracuse, Buffalo, Des Moines, and Columbus) outpaced other large metros in the growth of their service exports. Despite this lackluster growth performance relative to other metros, inflation-adjusted service exports grew faster than output in 20 of the 21 Great Lakes metros from 2003 to 2008 (Pittsburgh was the only exception).
- Considerable growth in global customers for products and services produced in the Great Lakes metros will come from the large emerging markets of Brazil, India, and China. Most Great Lakes metropolitan areas (12 out of 21) send 8.6 percent or more of their export value to Brazil, India, and China (the BIC countries), meaning that they meet or exceed the average large metro export share going to the BIC nations. Some Great Lakes metros, such as Youngstown, Des Moines, and Columbus, have seen huge jumps in the value of their exports to BIC countries over the last five years.
A legacy of success in exports does not guarantee future dominance, a lesson that Great Lakes metros should have learned through rough experience. But raising exports holds out the promise of creating thousands of new jobs in Great Lakes metros that desperately need them. For that reason, metropolitan leaders and their federal, state, and private sector partners must be aggressive and creative in determining what new or re-imagined goods and services the world demands from them, and equally dedicated to expanding their global reach.
Sentiment inside the Beltway has turned sharply against China. There are many issues where the two parties sound more or less the same. Trump and others in the administration seem heavily invested in a ‘get very tough with China’ stance. It’s possible that some Democrats might argue that a decoupling strategy borders on lunacy. But if Trump believes this will play well with his core constituencies as his reelection campaign moves into high gear, he will probably decide to stick with it, if the costs and the collateral damage seem manageable. But that’s a very big if, especially if the downsides of a protracted trade war for both American consumers and for American firms become increasingly apparent.