Last week, the Indy Chamber hosted our annual World Trade Day, an event designed to promote international opportunities for local companies. At the same time, legislators are deep in negotiations over the state budget, as the session draws to a close.
As lawmakers grapple with shrinking revenues, World Trade Day focused on growth. Speakers offered insights on NAFTA and other trade deals, the challenges of doing business in China, Brazil and other growing markets.
These topics may seem far removed from the fiscal challenges dominating debate a few blocks away at the Statehouse. But increasing global trade, particularly among our small and mid-sized companies, has great potential to grow our economy and refill the coffers of our cash-strapped state government.
Today, nearly 80 percent of the world’s earning power resides outside the United States, leading successful companies to court customers across the globe. Over the last five years, roughly 30,000 U.S. companies became active exporters. Exports are now responsible for 20 percent of our Gross Domestic Product and 11 million American jobs.
Indiana sold a record-setting $35.5 billion in goods and services overseas in 2014; roughly half of these shipments (by value) came from the Indianapolis region, ranking us 21st among the nation’s 388 metro areas.
But growing these numbers demands more than ‘business as usual’ – we need a fresh approach that mirrors our other efforts to reinvigorate our economy.
Indiana has been slow to move beyond the traditional, transactional approach to economic development. Our focus on keeping costs low and recruiting industrial employers has brought new jobs and investment to the state, but didn’t account for the potential of our own small businesses, and the need to encourage entrepreneurship and innovation. The vast majority of growth in Indianapolis (and in most regional economies) comes from the success of existing companies.
A similar dynamic shapes our approach to trade. The Indy region is home to powerhouse exporters like Eli Lilly & Company, Allison Transmission, Rolls-Royce, Dow AgroSciences and Roche Diagnostics. But beyond this cluster of large, sophisticated exporters, we see a huge drop off, especially regarding small to mid-size companies. Fewer than one of every ten Indy companies are exporting; we’re missing the global potential of hundreds (perhaps thousands) of businesses.
In a recent survey of local employers, roughly one in four non-exporting companies said they would pursue international customers but cited a number of hurdles to entry – most related to a lack of information and technical assistance. Our ability to fill these information gaps can help hundreds of would-be exporters enter the market.
The Indy Chamber has worked with Brookings to create a comprehensive export strategy through its Global Cities Initiative, a joint project with JPMorgan Chase. The Metro Indy Export Plan aims to grow the number of exporting companies in the region 20 percent by 2020. Just as we’ve made a coordinated effort to diversify our economy by building an entrepreneurial support system, the Export Plan calls for new resources for first-time exporters – organized for easy access to training, technical assistance and market research – as well as coordinated workforce and infrastructure strategies.
Asked about his success facing intractable challenges, Dwight Eisenhower remarked, “Whenever I run into a problem I can’t solve, I always make it bigger.” In the waning days of the session, the General Assembly is rightfully focused on line-by-line budget detail.
But the real problem – an underperforming domestic economy – is bigger. We’re slowly transforming our approach to economic development, and it’s paying off in more dynamic start-ups and homegrown business opportunities. In other areas, like talent attraction and retention, there’s still much work to be done. Broadening the global horizons of more Indiana companies is another part of the broader solution.