Exports: Next for the West?
The release of our new “Export Nation” report makes a strong argument that if the nation is going to begin “rebalancing” its off-kilter economy then U.S. metropolitan areas’ international exports need to be a bigger part of the picture.
Such a claim is at once self-evident and novel, given the facts of economic life and the obtuseness of typical Washington debates. But be that as it may, the export agenda has important regional relevance.
For decades the region has depended on super-fast migration-related growth, massive real estate and construction industries, and tourism to produce large numbers of middling-quality jobs in a hurry. Now, with domestic migration down, demand slow, and new construction way off, it’s becoming clear the Mountain metros are this time going to need to generate an organic recovery the old-fashioned way: through the creation and exportation of true value.
All of which suggests that the Mountain metros will likely need to go where the growth is and look in new directions for a true recovery.
This is what we’ve been getting at when we keep saying that the next economy will be export-oriented, lower-carbon, and innovation-driven (and associated with such related essentials as strong higher-education, highly trained workers, and thriving industry clusters producing innovative products).
This winter, we will provide a major analysis of the size, nature, and growth rates of the national and Western green economy in metros. But on exports we can show now that the Mountain metros are already in the export game to varying degrees that show real promise for further expansion that has the potential of making up some of the region’s growth deficit. Here are some highlights:
· Before the crackup, almost half a million workers in the Intermountain West’s 10 largest metropolitan areas were employed—often at superior wages—in export related work. In Phoenix more than 150,000 jobs were tied to exports.
· Seven out of the 10 large Mountain metros depend on exports for larger shares of their gross metropolitan product (GMP) than the nation’s largest 100 metros taken together. Exports generate a whopping 13.4 percent of Albuquerque’s GMP and 12.7 percent of Ogden’s and Provo’s (the U.S. large-metro average is about 10 percent).
· Moreover, nine of the 10 larger Mountain metros were moving in the right direction by not only expanding their export sales but growing more export intensive from 2003 to 2008. Only in Phoenix did export intensity decline.
· Finally, international exports of services—ranging from engineering and consulting work in Denver to research and technical services in Albuquerque—comprise a much larger share of Mountain metro exports, at 45 percent of the region’s total, than they do for the country’s largest 100 metros as a group and point to a foothold in an especially fast-growing world market. That no U.S. metro generated a higher share of its total exports from services as Las Vegas points to Vegas’ overspecialization on tourism, travel, and gaming even on the export side but also underscores that Nevada gaming companies had developed important export know-how before the crash.
In short, as they seek to construct a more sustainable next Mountain West economy, firms, metro leaders, and governors in the West begin with genuine strengths as they face the need to widen their horizons, go where the growth is, and exploit export opportunities, whether in Canada and Mexico or in fast-growing developing nations such as Brazil, India, and China.
We will write more in the coming weeks on how firms, metropolitan economic development leaders, and state officials can operationalize this new priority. For now suffice it to say the leaders of all sorts need to think more broadly, focus on building regional industry and innovation clusters, and attend to local and regional infrastructure needs.
But for now there is really no choice. Confronted with a major malfunction in the Mountain region’s traditional migration and real estate model, the Mountain West needs to go where the growth is. In that fashion, exporting energy research to Germany or precision machining and instrumentation to China holds out one possible source of more sustainable job-creation and prosperity for a region very much searching for that.
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