Export Nation: Does A Tipping Point Approach?

Since 2009, exports from the US have grown at a faster rate than GDP. This is reflected in the weak, national recovery in jobs while export-oriented regions and export-sector jobs have fared much better. As US exports are nearing 15% of GDP, one wonders that a nation long accustomed to protecting consumption may finally have to think about protection, and enhancement, of production. | see: US Exports as a Percentage of GDP 2007 – 2012.

North America is very, very rich in natural resources. On a relative basis to population, especially when compared to Asia, North America is a veritable motherlode of timber, natural gas, coal, and arable land.  The dependency the world maintains on North American food production, for example, is not new but the current drought-led devastation of the US corn crop serves as a reminder. Looking ahead, to a time when natural gas exports finally commence from British Columbia (circa 2015), I have to wonder how both the world–and the US–will digest our potential transition from consumer of last resort to critical provider of commodities.

A couple of thoughts, therefore, as the export economy continues to grow while stagnation and slow growth obtains more broadly in the US:

Political pressures will transition further in Washington, from the strong dollar post-war era to a weak or suppressed dollar export-era. Currency, industrial, and export policies seen historically in Australia and Japan may be instructive, in this regard.

Government investment may tilt further, towards infrastructure that smooths future increases in US export volumes. Inter-modal networks and port-related facilities may be the beneficiaries of significant public and private investment.

Small business formation may coalesce around export sectors. In export heavy regions such as the Pacific Northwest and The Gulf Coast, jobs may boom. Entrepreneurship may also gravitate towards the export economy, and (if you can believe it) MBA holders may increasingly find better opportunities in the world of “real goods” than on Wall Street.

Tensions between commercial export opportunities and their impact on the environment will rise. Such tensions are already appearing in the export of coal, but this is likely just the beginning.

–Gregor

  • http://work-bench.org/ Christopher Miles

    Excellent read, thanks as always. Export Chart is a clear response to the “We don’t make things anymore! meme

    In the coming years, as we slowly begin to export more coal and LNG, in future can there be a breakdown of manufacturing exports vs simple fuel/raw materials? I assume the chart above is ALL exports.

    Also, does an overseas dollar spent on a US manufactured item do more in our Economy than a dollar spent on coal or LNG?

  • https://openid.org/cougar_w cougar_w

     Exports of coal, timber and LNG are not “making things”. Other nations use our raw materials (taken for cheap by powerful corporations and sold abroad at huge profits) add value, and sell us back stuff they made and we did not. Net net, we still lose our natural wealth and our kids end up working with their hands in mines and forests.

  • Denny Chericone

    Can anyone tell me if corporations registered in the U.S. but who manufacture elsewhere are considered in the export numbers?

  • http://www.gregor.us/ gregor.us

     Yes, the chart here is for total exports as measured by value (in dollars).

    You can already get an accounting breakdown from the Commerce Dept, actually, which categorizes everything from technology to materials and manufactured goods.

    Just hit the PDF link here, from near the top of this page: http://www.census.gov/foreign-trade/data/

    Overall, I’ll say that, generally, the profit margins which we can book are higher from selling a finished product than we can book from selling raw lumber and coal. Those examples are easy to find. A Hollywood blockbuster film vs coal from Wyoming. Where it gets less clear however is when you start comparing, say, simple tools vs diesel or gasoline. The latter have pretty good profit margins, especially diesel. But again, these are indeed finished products and are produced from our industrial base (refineries).

    It’s a big subject. For small entrepreneurs in cities like my own, Portland, I see wonderful opportunities in food products. Now, those in the aggregate won’t move the needle on national exports but on a local scale these could create alot of wealth/sustainable means for small businesses.

    I am currently engaged in several conversation regarding US exports with contacts around the country. More on this soon.

    G

  • http://work-bench.org/ Christopher Miles

    Thanks for the link and clear /comprehensive reply- will stay tuned for more of your posts on this. I don’t have the skill set for it- but I think a rating system of some sort will be needed at some point. Export of raw materials say a 1 or 2 star (dpending on th level of complexity in harvesting those matierials) vs 5 star (advanced solar panel/carbon capture tech/dna sequencing tech, etc)
    Also is an overseas dollar spent on, say an f-35 as beneficial to the US as an overseas dollar buying solar, etc and thereby bringing down the overall price and speeding acceptance. I go back to thinking that a missile can only be used once, but advanced CHP turbines can be used over and over.

  • http://work-bench.org/ Christopher Miles

    Thanks for the link and clear /comprehensive reply- will stay tuned for more of your posts on this. I don’t have the skill set for it- but I think a “quality of work/component” rating system of some sort will be needed at some point for export/import statistics. For example, export of raw materials are given, say a 1 or 2 star (depending on the level of complexity in harvesting/mining/obtaining those materials) vs prhaps a 4 or 5 star (advanced solar panel/carbon capture tech/dna sequencing tech, etc)

    As a corollary, is an overseas dollar from the U.K. spent on, say, a Lockheed-F-35 as beneficial to the US as an overseas dollar buying solar, etc and thereby bringing down the overall price and speeding acceptance here?

    I go back to thinking that a missile can only be used once, but advanced CHP turbines can be used over and over.