December 2014 MassBenchmarks State Export Analysis


December 3, 2014


Daniel Hodge, Director of Economic and Public Policy Research

UMass Donahue Institute

(413) 577-2393

MassBenchmarks: Massachusetts Export Growth Trails U.S.

Massachusetts export growth has significantly lagged behind growth at the U.S. level since 2009 despite some recent signs of improvement – state’s export deficit not just due to lack of energy products and slowdowns in Europe

HADLEY – Massachusetts largely kept up with the rapid pace of U.S. export growth between 2002 and 2008. During the 2000s expansion, Massachusetts exports increased by 70 percent, from $16.7 billion in 2002 to $28.4 billion in 2008. After a dramatic fall-off in international trade in 2009 that hit both the state’s and nation’s exports, the U.S. experienced a resounding rebound, quickly recovering from 2009’s low in 2010 and then hitting new records each year since. In contrast, Massachusetts export growth since the recession has been fairly anemic. While U.S. exports surged by nearly 50 percent since the 2009 low, Massachusetts has seen growth of less than 14 percent. As of 2013, the state’s exports still remained below the record high of $28.3 billion reached in 2008.

During the 2009 to 2013 period, Massachusetts ranked 49th among the 50 states in export growth and saw its rank in total exports fall from 13th to 16th. Massachusetts exports have performed a bit stronger the past two years, with growth rates slightly above the U.S. growth in 2013 and year-to-date through September 2014, but not nearly enough to close the gap in growth. With exports not keeping up with the nation’s, Massachusetts’ “export intensity” (exports as a share of gross domestic product) was 6.0 percent in 2013 compared to 9.5 percent for the United States. Prior to the recession, the Commonwealth’s export intensity had been as high as 7.4 percent in 2008.

International trade is a key contributor to the Massachusetts economy and the relatively lackluster recent performance of the state’s exports is a potential concern. If Massachusetts had kept pace with U.S. export growth since the recession, exports would have totaled $35.3 billion in 2013, some $8.5 billion higher than the actual figure. The overall purpose of this analysis was to understand recent Massachusetts trends in exports and why they are not keeping up with the nation’s.

Key points that are explained in the briefing report include:

· Massachusetts has little or almost no presence in industries – primarily motor vehicles, refined petroleum products – that are experiencing a boom in U.S. exports;

· Growth in precious metals and stones exports (i.e., gold and silver) is slower in Massachusetts but performance in global commodity exchanges should not be construed as a competitive weakness for the state;

· The state’s lagging export performance cannot be simply blamed on the sluggish European economy, traditionally the top market for Massachusetts’ exports;

· Massachusetts’ exports would be substantially higher if services exports were measured (unavailable at the state level except through estimations); and

· Some improvements in overall export performance seen in 2013 and extending through September 2014 (the most recent data available as of this writing) indicate that Massachusetts export growth may be reviving.

“Massachusetts is neither a major producer nor exporter of the commodities driving much of the nation’s recent growth in international trade. One-third of US export growth since 2009 is in goods, such as fuels and motor vehicles, that are small contributors to the Massachusetts economy or largely related to global precious metals trading,” noted Branner Stewart, Senior Research Manager at the UMass Donahue Institute and lead researcher for this exports analysis. “Yet, $3.9 billion out of our $8.5 billion trade growth gap is due to competitive factors and losing market share in exports to most major international markets.”

Among Massachusetts top export industries, only electrical equipment and machinery (printing machinery, semiconductor manufacturing equipment, etc.) garnered a greater share of U.S. exports between 2009 and 2013. Miscellaneous manufactured goods (including medical equipment) experienced the sharpest loss in share among Massachusetts industries, while other large-scale Massachusetts exporting industries, including chemicals / pharmaceuticals, computers and electronics, plastics and rubber products, and transportation equipment also saw substantial declines in their respective shares of U.S. industry exports. The poor relative performance of Massachusetts chemical exports was due to a sharp decline to Europe, a market that grew for the U.S. in that industry between 2009 and 2013. Computers and electronics, Massachusetts’ largest exporting industry based on dollar value ($7.3 billion in 2013), also lost share despite moderate growth, 2009 to 2013, largely due to not participating fully in a surge of U.S. exports to Asia in this industry.

“The relatively weak performance in Massachusetts export growth came during a period where the Commonwealth’s economy generally recovered from the Great Recession at or above the pace of the national economy. Although additional research needs to be conducted, possible explanations for this discrepancy include Massachusetts firms shifting to more domestic trading partners, and a shift from export “products” to more services-oriented economic activity such as the boom in life sciences R&D activity and our growth in technology-driven services,” said Daniel Hodge, Director of Economic and Public Policy Research at the UMass Donahue Institute.

MA Export Analysis.pdf

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