Thursday, February 11, 2010

Oregon 's Exports: Troubles and Trends

Mike Rogoway in The Oregonian has a great piece today on the current state of Oregon's exports. Overall the news is dismal, echoing the astonishing decline in world trade that has resulted from the global recession.

Here is WTO data on global trade volume:

So Oregon is not exceptional in the overall decline in trade. But the main trend that is - perhaps not astonishing if you have been paying attention to the economic performance of countries -but remarkable nonetheless, is the soaring share of our trade with China. Most of this is due to the quick return to astronomical growth that China has experienced, but part of it is likely due to proximity. Despite all the advances in container shipping and other efficiency gains, proximity still matters in trade, and it matters a lot. So if there is good news for Oregon for the future it is the lucky fact that we are relatively close to China's enormous and rapidly growing market.

As Rogoway notes, right now a lot of what we are doing is sending computer chips to manufacturers of computers and electronics. This is great as long as what is being done in Oregon can't be done as well and more cheaply in China. For the time being this is true for the more advanced stuff - the cutting edge stuff where the engineers and the manufacturers work closely together - but the spectre of competition in the future is troubling for Oregon. And it once again leads me to make the point that in order to keep this competitive edge we need to invest in human capital. And apropos of the reigning in of the BETC, we need to transfer less taxpayer money to industries and companies that may or may not grow in Oregon and more money on the fundamentals of growth: education and technology.


Thomas Jerry said...

Are exports to foreign countries more important than exports to other American states? Or to other American companies?

Patrick Emerson said...

No. But since China is the once area of the world that is growing strongly, having it as a major market for what we produce is a good thing.

And a lot of the exporting to China in the form of microprocessors is probably to other American companies (Apple for their iPhone was one example in Rogoway's piece). It really is a global market and national distinctions are becoming less and less clear.