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Export Growth Requires Infrastructure Spending

Port of Oakland
A report issued by the U.S. Conference of Mayors predicts significant growth in exports from the United States over the next decade, prompting some mayors to call for increased spending on such freight-moving infrastructure as port facilities. Courtesy of Wikimedia Commons/Daniel Parks 

A new report anticipates significant growth in U.S. exports during the next decade—a finding that has sparked calls for increased spending on infrastructure. 

March 13, 2012—A report issued by the U.S. Conference of Mayors (USCM) in late February—U.S. Metro Economies: Exports in the Next Decade—estimates that exports will account for 39.7 percent of real, inflation-adjusted growth in the nation’s gross domestic product (GDP) during the next decade. By comparison, exports totaled just 26.5 percent of GDP growth during the previous decade, according to the report, which was prepared by IHS Global Insight, of Englewood, Colorado. Among the factors contributing to the growth of exports is a weaker dollar, which makes U.S. goods relatively cheaper abroad and imports more expensive at home. Another factor is the growing presence of foreign companies setting up operations in the United States to mitigate currency risk, reduce transportation costs, and improve relations with U.S. customers, according to the report. Meanwhile, many international markets are growing more quickly than the United States, offering a boon for U.S. exporters.

The report focuses on metropolitan areas, in particular, as they play a leading role in the export trade and are home to the nation’s larger ports. For example, metropolitan areas account for 88 percent of U.S. exports, half of which originate within the nation’s 20 largest metropolitan areas, according to the report. Against this backdrop, the report calls on officials to take steps to facilitate economic growth within metropolitan areas. “The U.S. export industry would be devastated without continued development of the nation’s metro areas,” the report states. Ultimately, the economic fate of metropolitan areas goes a long way toward determining the economic fate of the nation as a whole, the report noted. “Policy makers need to be aware that the maintenance and development of metro economies’ continued ability to generate the economic activity derived from exports is essential for the nation to prosper,” the report says.

Freight transportation offers a means by which targeted infrastructure spending can help boost exports, the report noted. “To meet the needs of efficient freight transportation, infrastructure spending should go where additional investment reduces export costs and inefficiencies,” the report states.

Reacting to the report, members of the USCM stressed the important role that infrastructure plays in creating jobs and facilitating economic growth. “If you’re serious about creating jobs, you have to be serious about expanding exports,” said Antonio Villaraigosa, the USCM president and the mayor of the City of Los Angeles, in a February 24 news release issued by the USCM. “Ninety-five percent of the world’s consumers are outside the United States,” Villaraigosa said. “To help businesses get their products from cities across the United States to markets around the world, we need to invest in our roads, bridges, ports, and rail systems.”

This point was emphasized further by Alvin Brown, the mayor of Jacksonville, Florida. “In an increasingly globalized economy, it is vital that the U.S. is able to take advantage of the economic opportunities opening up around the world,” Brown said in the USCM’s release. “To do so, we must get moving on improving and expanding our roads and railways and modernizing our ports, all of which are in need of immediate attention,” he said. In fact, many ports along the Atlantic and Gulf Coasts, in particular, have begun expanding in recent years in order to accommodate an expected increase in larger vessels following completion of the Panama Canal expansion in 2014 (see “Ports Plan for New Vessels.”).

“The report’s findings underscore the direct correlation between exports, job creation, and infrastructure investment,” said Leslie Blakey, the executive director of the Coalition for America’s Gateways and Trade Corridors, in a March 6 news release. With headquarters in Washington, D.C., the coalition works to increase federal spending on the nation’s intermodal freight infrastructure. “Our national goods movement system is vital to moving the nation’s commerce and growing our export economy,” Blakey said. “America needs a safe, efficient, reliable multimodal supply chain to continue stoking the engine of commerce and supporting jobs growth,” she said.


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