Doubling the exports of goods and services in the next five years would be a “major boon” to metropolitan areas of the Intermountain West.
That’s the conclusion presented by a new study by the Brookings Mountain West Institute which presents a comprehensive collection of quantitative research on how the region can transition to a different economy.
The report says that a jump in exports would bring thousands of good jobs to the region. “Export-related jobs pay relatively well,” the report states. “And for metropolitan area industry clusters and firms, international engagement and competition brings its own benefits of heightened innovation and productivity growth.”
The prospect of such gains is especially attractive in the Mountain zone, moreover, given the present moment of self-reflection in a region that appears faced with the partial breakdown of its traditional migration- and real estate-driven growth machine. With such sources of domestically-driven growth looking less reliable, export-based development holds out one possible new source of sustainable job-creation and broadly shared prosperity.
The Brookings study says there are large overseas markets for US-produced products and services whose potential is not being realized, and that the transformation to a more export-oriented economy will be led by America’s metropolitan areas.
To take advantage of these opportunities, which are crucial to re-balancing our nation’s economy and creating a foundation for our future economic security, we must harness our economic geography, take advantage of the resources in our metropolitan areas, and shape national policies to promote exports by engaging the economic realities of our metros.
In Boise, Phoenix and Albuquerque in particular, the study says, public and private leaders need to actively engage and collaborate to create good-paying jobs.
As to the Mountain West findings, here they are, based on data for the years 2003 to 2008:
1. Exports are an important source of good jobs in the Mountain West and export growth has the potential to generate significant and much-needed job creation in the region. In 2008 fully 454,000 workers in the 10 largest Intermountain region metros were employed in export-related jobs, with thousands of other local jobs dependent on the spending on local services that those earnings generate. What is more, export jobs are good jobs: The typical Mountain metro worker employed in his or her metro’s top export sector earns nearly 1.5 times the wage of the average American worker.
2. The major Mountain region metropolitan areas are not exceptionally large exporters in dollar terms but a number of them export a significant portion of their overall output. Seven out of 10 of the Intermountain West’s large metros depend on exports for larger shares of their gross metropolitan product (GMP) than the nation’s largest 100 metros taken together. Mountain metros, moreover, not only expanded their export sales but also grew more export intensive from 2003 to 2008. Only in Phoenix did output growth outpace export growth overall so that export intensity declined.
3. Services constitute a greater share of export activity in the Intermountain West metros than they do in the average large metro nationally. Service exports—ranging from architecture or engineering work to research and consulting to education and tourism—represent a strength of the Mountain region. Service sales comprise a much larger share of Mountain metro exports, at 45 percent, than they do for the country’s largest 100 metros as a group, which places only 37.5 percent in services. In two Mountain metros—Las Vegas and Denver—services account for the majority of all regional exports. In fact, Las Vegas generated a larger share of its GMP from service exports in 2008 than any other major metro.
4. The Mountain region’s large metros are quite varied in their export specializations. Computer and electronic product manufacturing stands out as one of the region’s clear specializations, and transportation equipment (frequently related to defense); service production, including tourism; and metal manufacturing also distinguish the region’s export map. Across metros, however, the export bases of some economies appear far more diversified than others. And one note of concern: Export earnings in the prominent computer and electronics industry actually fell in seven metros over the five-year period studied, pointing to the need to maintain constant vigilance in the face of changing global markets.
5. Strengths in manufacturing and innovation tend to drive metropolitan export power. Manufacturing industries nationally are the most export oriented, and so metro areas that specialize in manufacturing tend to export the largest shares of their GMP. Export-oriented metropolitan also tend to be significantly more innovative, defined by their rate of patent production—which existing evidence suggests may be explained by more innovative firms being more likely to export by nature and export activity itself reinforcing innovation through competition. Exemplifying this in the West is Boise, the region’s patent leader and number two metro on manufacturing and export intensity indicators.
6. Canada and Mexico remain the region’s leading export markets but major growth opportunities reside in large emerging markets like Brazil, India, and China (the BIC group of countries) as well. With years of potentially tepid domestic sales ahead, companies need to redouble their search beyond the U.S. border for new sources of demand. As it happens, though, exports from the large Mountain metros are no more likely to be destined for Mexico than those from the average large metropolitan area, despite the region’s close proximity. And while five of the Mountain metros capitalized on opportunities farther afield—in the large and rapidly growing emerging markets of the BICs, for example—five stood on the sidelines with below average growth in exports to these markets.