With Growth Outside the U.S., Increasing Exports is Essential

By March 24, 2010Trade

The March 24, 2010, Washington Post expresses doubt that exports will add jobs (“Will more exports mean more jobs?”).   The Post opined that productivity rises may dent President Obama’s goal to generate at least two million more jobs by doubling exports in five years.

The fact of the matter is that long-term manufacturing productivity per worker, decade in and decade out, has increased at about 3.5 percent per year – and it is a good bet that will continue.  The trick to creating  jobs is to have real manufacturing output grow faster than 3.5 percent a year. The problem is that domestic demand for manufactured goods has grown at a considerably smaller rate than that, and forecasts indicate slow growth is likely to continue for a number of years.

That means exports have to be the principal source of manufacturing growth.  As a matter of fact, between 2003 and 2008, exports provided 50 percent of the total increase in manufacturing production – and if jobs are to increase in the future, exports will have to pull even more weight.

Face it, the bulk of world economic growth – and demand for manufactured goods – is going to be outside our borders, so if we don’t put more emphasis on exports, we are in real trouble. 

Doubling exports in five years is a real stretch – very challenging.  But it can be done with the right government policies.  While the Obama Administration has made a good start at a National Export Initiative in recent weeks, a lot more will have to be done.  Most importantly, the Administration and the Congress are going to have to realize the export goal cannot be reached without getting more access to foreign markets.  And that means passing the three pending agreements — Colombia, Korea and Panama — and going on to negotiate more.

We already have a significant surplus in our manufactured goods trade with our free trade partners – cumulating to nearly $50 billion in the last two years.  During that same time, we racked up a manufactured goods deficit of $820 billion with countries that did not open their markets to us through trade agreements.

The way forward is obvious, and the time to move forward is now.

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