Exporting is key to grow the economy

By Edgar Ortiz

For the AJC

With the economy sputtering and facing strong headwinds, our metropolitan areas, the nation’s hubs of knowledge, technology, capital, innovation and manufacturing, offer our best hope to increase exports, create new jobs and grow the economy.

The lackluster performance of the U.S. economy, with persistent high unemployment, stagnant economic growth and unsustainable levels of debt, describes a new economic reality. It is the aftermath of policy excesses and unbounded optimism that culminated with the financial crisis of 2008. We are in the midst of a major national and global financial realignment, a world filled with uncertainties in what Pimco’s CEO Mohamed El-Erian calls the “new normal.”

Lack of confidence is hampering the recovery as both the consumer and business sector wait on each other to take the lead and pull the economy out of its slump.

Consumers experiencing chronic unemployment are spending less and saving more, with the savings rate increasing to 6.2 percent, the highest in the last four quarters.

Businesses, facing faltering demand, continue cutting costs, mainly through payroll reductions and sit on record cash reserves that now exceed $1.84 trillion, up from $382 billion a year ago.

In this new economic landscape with the federal deficit projected to exceed $1.5 trillion, growing national debt and widening trade deficit, an insular economy fueled mainly by services, lacks the horsepower to generate enough internal demand to create jobs and grow.

To grow the economy in the midst of this “new normal” we need to look beyond our borders and focus on exports, recommends a recently published study by the Brookings Institution.

Only one percent of U.S. businesses export and only half of this small number exports to more than one country.

Clearly, as a nation, we are not exporting enough. In 2008, U.S. total exports accounted for only 12.7 percent of the gross domestic product, less than 29 percent, the average for other developed nations. Exports are key to the growth of the economy generating 11.8 million jobs, 8.3 percent of the labor force with metro areas as the center of production.

With their high concentration of human capital, manufacturing and industrial centers, metropolitan areas constitute what the Brookings’ report refers to as “points of leverage for scaling trade with the rest of the world” and need to do more to exploit these capabilities.

When compared to the nation’s 100 largest metro areas, Metro Atlanta lags behind many others and needs to improve its export performance score.

Atlanta ranked 13th in 2008, producing $21.8 billion in annual export sales and ranked 77th in the proportion of the gross metropolitan product that is exported.

Exports generated 171,548 jobs, ranking 12th nationally.

The growing economies of Brazil, India and China, with 20 percent share of the global gross domestic product, surpassing the U.S. economy by the first time, provide a large and expanding market to sell our products and create jobs.

Suniva, the Norcross-based manufacturer of high efficiency silicon solar cells and high power solar modules, best represents how American companies can compete in the global economy.

Founded in 2007, Suniva was receiving 90 percent of its revenue from exports by 2009. In the process, it created 150 jobs locally with plans to add 450 more jobs in Michigan.

Although facing one of the most challenging economic times of the last 60 years, Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institution reminds us, “Suniva represents how the U.S. builds, firm by firm, the next American economy and, in the process, creates millions of private sector jobs.”

Edgar Ortiz is president and CEO of Strategic Analytic Solutions, an Atlanta-based management consulting firm that provides Strategic Planning, Predictive Analytics and Credit Risk Management Advisory services to small and midsize businesses.