Editor’s note: This commentary was published on CenterMaryland.org on October 2, 2015.
By Donald C. Fry
Did you know that the lion’s share of the world’s purchasing power lies outside the United States?
It’s actually a statistic worth thinking about: 70 percent, according to the U.S. Department of Commerce’s International Trade Administration.
And that is only expected to grow in the coming years as emerging economies in South America, Asia and the Far East expand and increasingly need goods and services produced by more advanced countries like the U.S. and Europe.
Now, let me pose another question: Do you know where the Baltimore metro area ranks when it comes to the percentage of the goods and services produced that are exported?
The region is near the bottom, unfortunately.
The ranking is No. 90 on the list of the 100 largest metro areas in the United States when it comes to the value of exports as a share of the region’s gross domestic product (GDP). Exports represented only 6.9 percent of the Baltimore metro area GDP in 2014.
For perspective, Salt Lake City is ranked 14th on the list, with exports representing 15.4 percent of its metro area GDP.
You’d think the Baltimore region, home to a diverse economy, major universities, and easy access to a terrific port and international commercial airport, would rank higher on the list. But it doesn’t.
The figures cited above underscore a disconnect for the Baltimore region’s current economy and what needs to be done to be competitive in the emerging global economy.
To help address this imbalance and better position the Baltimore region for these beckoning overseas opportunities the Greater Baltimore Committee has been spearheading a significant economic growth project, called the Global Cities Initiative, with several public sector partners and the guidance of the Brookings Institution and a public/private sector steering committee.
Baltimore is one of eight regions in the U.S. that was selected earlier this year by Brookings to be part of its Global Cities Initiative 2015 cohort. The project aims to help leaders in select U.S. metropolitan areas reorient their economies toward greater engagement in world markets.
As part of this initiative, surveys and interviews were conducted to fully assess how well the Baltimore region is doing when it comes to exports. The data analysis, survey, and interviews revealed some interesting findings – in addition to the one that only about 7 percent of the metro areas GDP derives from exports.
The market assessment and findings will be unveiled and discussed in detail at the Greater Baltimore Committee’s annual Economic Outlook Conference, being held this year on October. 19. The conference will largely focus on how small and mid-size businesses can expand into global markets and thus grow business opportunities.
Two key points will underscore the conference:
First, you do not need to be a large international corporation with a huge marketing budget to be an export company. In this age of technology small and mid-size companies have tremendous capacity to export goods and services abroad.
In fact, the U.S. Commerce Department says that 98 percent of all U.S. companies exporting today are small or mid-size companies.
That’s a heartening statistic for the Baltimore region and the state as a whole. We are sometimes called the “small business state” because most companies operating in Maryland are just that – small.
Second, despite the low percentage of the GDP that is exported from the Baltimore area, our region is a significant player when it comes to the value of the goods and services that are exported.
Research shows that the value of the region’s exports is actually quite high – $12 billion. That statistic places the Baltimore region in the top third – 28th specifically – among the 100 largest metro areas when it comes to the value of exports.
The message that can be taken is that while our region has a very sizeable economy there remains a tremendous amount of untapped potential from expanding our exporting of goods and services.
As a whole, our regional businesses have tended to rely on the local business market or U.S. business sales to grow – some of that being driven by a heavy reliance on federal spending, like defense, due primarily to Baltimore’s proximity to the nation’s capital.
With the unpredictability of government spending and the consistent gridlock seen in the federal budget process it is prudent to pursue strategies to become less reliant on the public sector and to engage and optimize new private sector growth opportunities.
The bottom line is this: The Baltimore metro regional economy needs to hit the “reset” button and embrace exporting on a broader and deeper scale.
Companies need to develop export market strategies that match the goods and services they offer. Also resources, public and private, need to be introduced to them and made available so they can succeed globally.
This isn’t to suggest that “export or die” needs to be the mantra for businesses in the Baltimore metro region.
But as Penny Pritzker, the U.S. Secretary of Commerce put it aptly: “More and more U.S. businesses understand that 96 percent of their potential customers live outside the United States, and that selling their world-class goods in the global marketplace is critical to their bottom line.”
Heading those words will help position the Baltimore region emerge as one of those U.S. metro areas that are at the forefront of adjusting their regional economic strategy to this new reality.
Don Fry is President and CEO of the Greater Baltimore Committee and a regular contributor to Center Maryland.