Exports: These Spots Are HotChristopher Farrell
Exports are playing an ever-larger role in the U.S. economy. What's more, they are exerting a powerful--although uneven--influence on regional growth. Last year, merchandise exports accounted for an 8.6% share of gross domestic product, up from 5.9% in 1988. But in the Pacific region, according to Steven G. Cochrane, economist at Regional Financial Associates Inc., merchandise exports as a share of gross state product (GSP) rose from 7.7% in 1988 to 12.1% in 1994. This part of the country benefited from explosive growth in the Pacific Rim countries of Asia. And in California, export growth of more than 15% last year contributed 1.5 percentage points to GSP and was a vital force behind the Golden State's economic recovery.
Similarly, the industrial Midwest is an export leader. The contribution of exports to Michigan's economic growth doubled in 1994, as exports of autos, auto-related products, and industrial machinery boomed. In the mountain states, growth would have been 1.1 percentage points lower last year without exports. Colorado's industrial machinery and computer-equipment sales gained 50% over last year, to $1.8 billion, for example. In the Northeast, however, the impact of exports has been just about average in recent years, says Cochrane.
Of course, being dependent on international trade can backfire, at least in the short run. Last year, West South Central states such as Texas and Louisiana received the largest regional boost from overseas sales. Thanks largely to trade with Mexico, exports boosted Texas' growth by nearly two percentage points in 1994. With the Mexican economy now in a severe recession and the peso devalued, U.S. merchandise exports to Mexico in the second quarter of 1995 were down by 15% from the fourth quarter of last year. Mexico won't generate much export activity in the Southwest this year or next.