Thinking About Exporting?

• Author: DAVIDSON, LARRY
• Position: Indiana exports on the rise - Brief Article - Statistical Data Included

The United States is the largest and richest market in the world, so how much can be gained by selling to other countries?

Every company, sooner or later has to decide about exporting. For some firms, the answer will be simple because their size or products dictate a local marketplace. For others, the answer is simple because foreign buyers are begging for their product.

For a third group, however, the answer is more difficult and deserves considerable thought and analysis.

The United States is the largest and richest market in the world, so how much can be gained by selling to other countries? For one thing, a mature U.S. economy tends to grow by 2 percent to 3 percent per year. Sure, it grew faster than that over the last several years, but even with a "new economy" you can't count on it growing by more than 3 percent to 4 percent per year.

Compare that to China, a country that grew by more than 10 percent per year for over a decade. Compare that to most developing countries which expect to grow by 6 percent to 8 percent per year in the next decade. U.S. exports to the world were $466 billion in 1988. They rose to $985 billion in 1998 and the U.S. Bureau of Labor Statistics projects they will exceed $1.9 trillion in 2008. That's close to an extra $1 trillion in export sales for U.S. producers between 1998 and 2008. Who is going to take advantage of those new sales?

What do foreigners want from United States producers? Consider some of the projections of the U.S. Bureau of Labor Statistics for U.S. exports from 1998 to 2008. Growth in exports of computers is projected at 24 percent per year. Growth of 12 percent is forecast for capital goods. Services are expected to see 6 percent export growth each year. Auto and parts exports are expected to be up 5 percent each year between 1998 and 2008, while industrial supplies and materials exports are projected to grow by 4 percent annually.

Those are U.S. projections--what about Indiana companies? Those projections bode well for Indiana because the Hoosier state excels in producing capital goods, industrial supplies and auto parts.

We don't have any projections for Indiana exports, but we have been tracking them for many years. Consider how Indiana compared to the nation over the time period from 1988 to 2000. U.S exports of merchandise increased from $313 billion in 1988 to $780 billion in 2000--or by about 12.5 percent per year. In comparison, Indiana exports went from $4.7 billion to $16.5...