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Explore and research new markets today and pounce in good times
By Michael R. Czinkota and Charles J. Skuba |
March 9, 2009, Monday
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Print Edition
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FOR the past three decades, global activities reflect, in an outsized way, the shifts in domestic economies.
When domestic consumption is up, trade is up even more. Nowadays, when domestic activities are down, trade is down as well, only much more so.
With predictions of further economic decline and contracting global demand, further international slides can be expected.
Indeed, the release of annual trade data by the US Commerce Department last month showed that US exports declined 6 percent in December following a depressing November.
Yet, a closer look at the trade data does offer some encouraging longer-term implications.
First, the decline in the US trade deficit, which hit a six-year low in December, was good news. The trade data reveal underlying strength in exports.
Barring a steep rise in the price of oil imports, the decline in the trade deficit, which still stands at a daunting US$678 billion for the year 2008, promises to continue.
Imports are down more sharply than exports, despite their larger base.
Economic theory, recent trends, and experience from previous cycles promise a continuation of that import decline and the one-sided overhang in the bilateral trade balances.
American goods and services producers have continued to build demand among overseas customers.
Last year was a record year for US exports, which passed US$1.8 trillion. Exports grew at a rate of 12 percent over 2007 and now comprise 13.1 percent of US GDP.
US annual export growth was in double digits from 2004 through 2008 and has outpaced import growth since 2006.
Through mid-summer, this export growth had been sizzling along at a rate of nearly 19 percent before slowing as the global economy began to contract and Boeing workers went on strike.
In seven of the top 10 export markets for the United States in 2008, American exports growth exceeded that of imports by nearly twice or more.
US exports to Mexico and China, our second and third largest export markets, grew at 11.4 percent and 9.5 percent, while imports only grew at 2.5 percent and 5.1 percent respectively.
Exports to Canada, the largest market, grew at 5 percent while imports grew slightly more at 5.8 percent, reflecting the interconnectedness of the two economies.
US service providers have also demonstrated a strong growth pattern. In 2008, US service exports grew faster than imports. Overall, the US services surplus increased US$24.9 billion to an annual record of US$144.1 billion.
We believe that American manufacturers and service firms are well positioned globally because they are increasingly delivering what the world prefers and wants.
US worker productivity in manufacturing continues to increase at a rate faster than most of the major competitor nations.
The reasons for eventual success are rooted in marketing factors. Decades of dedication to innovation, quality, customer-centrism, marketing research, and branding, is providing American companies with an advantage.
As the 2008 Business Week annual ranking of the 100 Best Global Brands shows, even in difficult times, 52 of the leading brands were American.
Of course, when demand is down among the world's global trading partners, little or no trade growth is likely to occur until a recovery begins.
However, it makes sense to prepare for when global buyers regain confidence. This applies to all nations.
Now is the time to use slack resources to explore new market opportunities, new cultures, new customers.
Then, when economic conditions get better, companies can pounce on the markets they have researched and prepared for. Export promotion is a vital economic stimulus.
(Michael Czinkota researches international marketing issues at Georgetown University and the University of Birmingham in the UK. He served in trade policy positions in the Bush and Reagan Administrations. He can be reached at czinkotm@georgetown.edu. Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the US Department of Commerce. He can be reached at cjs29@georgetown.edu. The views expressed are their own.)
When domestic consumption is up, trade is up even more. Nowadays, when domestic activities are down, trade is down as well, only much more so.
With predictions of further economic decline and contracting global demand, further international slides can be expected.
Indeed, the release of annual trade data by the US Commerce Department last month showed that US exports declined 6 percent in December following a depressing November.
Yet, a closer look at the trade data does offer some encouraging longer-term implications.
First, the decline in the US trade deficit, which hit a six-year low in December, was good news. The trade data reveal underlying strength in exports.
Barring a steep rise in the price of oil imports, the decline in the trade deficit, which still stands at a daunting US$678 billion for the year 2008, promises to continue.
Imports are down more sharply than exports, despite their larger base.
Economic theory, recent trends, and experience from previous cycles promise a continuation of that import decline and the one-sided overhang in the bilateral trade balances.
American goods and services producers have continued to build demand among overseas customers.
Last year was a record year for US exports, which passed US$1.8 trillion. Exports grew at a rate of 12 percent over 2007 and now comprise 13.1 percent of US GDP.
US annual export growth was in double digits from 2004 through 2008 and has outpaced import growth since 2006.
Through mid-summer, this export growth had been sizzling along at a rate of nearly 19 percent before slowing as the global economy began to contract and Boeing workers went on strike.
In seven of the top 10 export markets for the United States in 2008, American exports growth exceeded that of imports by nearly twice or more.
US exports to Mexico and China, our second and third largest export markets, grew at 11.4 percent and 9.5 percent, while imports only grew at 2.5 percent and 5.1 percent respectively.
Exports to Canada, the largest market, grew at 5 percent while imports grew slightly more at 5.8 percent, reflecting the interconnectedness of the two economies.
US service providers have also demonstrated a strong growth pattern. In 2008, US service exports grew faster than imports. Overall, the US services surplus increased US$24.9 billion to an annual record of US$144.1 billion.
We believe that American manufacturers and service firms are well positioned globally because they are increasingly delivering what the world prefers and wants.
US worker productivity in manufacturing continues to increase at a rate faster than most of the major competitor nations.
The reasons for eventual success are rooted in marketing factors. Decades of dedication to innovation, quality, customer-centrism, marketing research, and branding, is providing American companies with an advantage.
As the 2008 Business Week annual ranking of the 100 Best Global Brands shows, even in difficult times, 52 of the leading brands were American.
Of course, when demand is down among the world's global trading partners, little or no trade growth is likely to occur until a recovery begins.
However, it makes sense to prepare for when global buyers regain confidence. This applies to all nations.
Now is the time to use slack resources to explore new market opportunities, new cultures, new customers.
Then, when economic conditions get better, companies can pounce on the markets they have researched and prepared for. Export promotion is a vital economic stimulus.
(Michael Czinkota researches international marketing issues at Georgetown University and the University of Birmingham in the UK. He served in trade policy positions in the Bush and Reagan Administrations. He can be reached at czinkotm@georgetown.edu. Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the US Department of Commerce. He can be reached at cjs29@georgetown.edu. The views expressed are their own.)
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