Exports: A Vital, and Growing, Part of New York's Economy
As New York continues its economic comeback, the performance of the state's manufacturing firms will depend largely on their ability to penetrate and compete successfully in foreign markets.
Exports have provided much of the fuel for the nation's economic expansion over the past five years. The surge in trade has provided a major boost for the manufacturing sector, in particular.
Protectionists (who can be found in the business community as well as in organized labor) claim that these developments have hidden, overwhelmingly negative consequenceslike a loss of jobs to Mexico, or the continuing expansion of "Japan, Inc."
But Ross Perot's "giant sucking sound" has yet to be heard; indeed, federal trade officials say that both the U.S. and Mexico have gained jobs from the adoption of the North American Free Trade Agreement. Meanwhile, Japan's current economic woes have exposed the downside of that country's policy of emphasizing exports while trying to protect its domestic industries from foreign competitors.
Trade pays off
It's certainly true that expanded trade, like all forms of stepped-up economic competition, can bring some short-term costs along with its benefits. But on balance, the performance of the U.S. economy in recent years provides solid evidence that free trade is good for manufacturers, good for workers, good for consumersand good for any state whose manufacturers are successful exporters.
For New York, as the graph above illustrates, export industries have bucked the trend of our decline in manufacturing jobs. Manufacturing export employment (the scale on the left) has risen since 1994, even as other manufacturing jobs (the scale on the right) have declined.
To simultaneously compete in global and domestic markets, manufacturing and other firms must become more efficient and productiveand to stay competitive on a global basis, they must continuously improve their performance. Firms that make a sustained commitment to exporting are not only able to invest more in the communities where their facilities are located, but they also become more stable as employers and taxpayers, more capable of withstanding the inevitable cyclical changes in national economic conditions.(1)
The benefits of exports are not confined to the Fortune 500 industrial companies. Small manufacturers appear to gain as much as large corporations from the "performance premium" generated through exporting activity.(2)
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