Globalization enables producers of goods and services to move more easily beyond the U.S. market of 276 million people and sell to the world market of 6.1 billion. This is very good news, since exports now account for almost one-third of real U.S. economic growth — and a very large portion of New York’s economic development. Consequently, the income of local workers and farmers, and the growth prospects of an increasing number of New York-based businesses are pegged to globalization.

In 1999, the United States exported $684.4 billion in goods and $271.9 billion in services for a total of $956.2 billion. Since 1993, this represents an increase of 49%. Based on calculations provided by the U.S. Trade Representative ($1 billion in goods and service exports sustains 11,986 jobs), this growth supported 11.5 million jobs. And these jobs pay more than the average U.S. wage. How much more?

According to the U.S. Department of Commerce, workers in jobs supported directly by exports earn 20% more than the national average, while workers in high-technology jobs supported directly by exports receive 34% more. Combined, workers in jobs supported both directly and indirectly by exports are paid 13% more. Why Exports Matter: More!, a report published by the Institute for International Economics and The Manufacturers Institute, states that unskilled workers also earn more at exporting plants.

Why Exports Matter: More! indicates that worker productivity is higher and employment growth is stronger at exporting firms, as compared to non-exporting firms of the same size in the same industry. Thus, during a five-year period, it was revealed that the measure of value-added input per employee (one measure of productivity) was almost one-sixth higher in exporting plants than in comparable non-exporting plants.

Additionally, exporting firms experienced almost 20% faster employment growth than non-exporters, and were 9% less likely to go out of business. Communities where exporters reside also benefit through a more stable workforce and a strong tax base. Furthermore, the revenue generated from exports flows to local communities, through restaurants, retail stores, movie theaters, etc., and spreads risk should the domestic market enter a period of slow growth or recession.

Exports of Services Outpace Merchandise

Every year for almost three decades, the U.S. service sector has enjoyed a trade surplus that has consistently reduced the U.S. trade deficit. For example, in 1999, U.S. exports of services decreased the overall trade deficit by more than $80 billion — that’s a 25% reduction. And since 1980, U.S. exports of services have grown 130% faster than exports of goods. These facts are often overlooked. But more importantly, not always realized are the tremendous benefits currently derived from — and the huge potential offered by — the service sector in terms of economic growth, personal income, employment, and exports.

According to Recent Trends in U.S. Services Trade published by the U.S. International Trade Commission, travel and tourism was the largest U.S. service export via cross-border trade in 1998, accounting for 29% of the total. This was followed by the exports of intangible intellectual property (reported as royalties and license fees), 15%; business, professional, and technical services, 10%; maritime and air freight transportation services (including port services), 9%; and passenger fares (airline and maritime), 8%.

In August 2000, average hourly service sector earnings in the United States were $13.72, only slightly less than hourly earnings in manufacturing, according to the Bureau of Labor Statistics.

The U.S. service sector, especially the New York service industry, is extremely advanced and internationally competitive. With the recent introduction and availability of new and inexpensive technology — led by telecommunications, computers, and the internet — millions of people and companies worldwide now have the ability to purchase services from anywhere.

As a result, it is anticipated that the export of business, professional and technical services (accounting, advertising, engineering, franchising, consulting, public relations, testing and training, in addition to many others) will increase rapidly.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




More Articles | Speaker Programs | Speaker Demo | Videos | Services