Doubling U.S. exports: Can it be done?

U.S. President Barack Obama has announced the goal of doubling U.S. exports within the next five years. Since the end of 2008, export growth has halted on a global level. U.S. exports in 2009 were below those in 2007. Overall, in the 10 years from 2000-2010, U.S. exports grew only by about 50%. Doubling exports in five years indicates a task four times as large, yet its achievement can greatly improve the economy and benefit American workers.

How can the U.S. achieve such a goal? What activities need to be rebalanced or restructured to set us on the right path? How can, with prudent use of government resources, U.S. firms, be enticed to export more? With these kinds of questions in mind, we recently prepared testimony for the House Small Business Committee based on our extensive research on international business activity of U.S. companies.

Many U.S. businesses see only the risks of exporting rather than the opportunities of the international market. The psychological distance of foreign markets and uncertainties about international business practices are key barriers to many U.S. managers. As a result, the United States underexports when compared to other nations. On a per capita basis, German exports in 2009 were $13,670 for every man, woman, and child. The figure for Japan was $4,063; for the United States, it was only $3,238.

When a firm starts to export, management’s perception of risk exposure grows. There are entirely new factors such as currency exchange rates, greater distances, new modes of transportation, new government regulations, new legal and financial systems, new languages, and often substantial cultural diversity. At the same time, due to investment needs into the exporting effort, the immediate profit performance may deteriorate. Our research indicates that export procedural expertise is crucial for successful performance. Such expertise and managerial ability falls short even for experienced large exporters.

During the first two years of exporting, managers may face the unusual condition of rising risk accompanied by decreasing rewards. In light of this reality, and not knowing whether there will be a pot of gold at the end of the rainbow, many executives either do not initiate export activities or discontinue them. There is a short-term gap in the working of market forces. Government export assistance can help firms over this rough patch to the point where profits increase again and risk heads downward. Bridging this short-term market gap may well be the key role of export assistance, and the major justification for the involvement of the public sector.

Export assistance can target the organizational characteristics and capabilities of the firm and improve them. It can also work on the managerial characteristics and contribute to knowledge and competence. Government also needs to continually monitor the environment and opportunities, as well as barriers, for U.S. companies.

Export assistance will be most effective when it reduces the risk to the firm and increases its rewards from export operations. For example, providing information on market potential abroad is likely to decrease the risk (both real and perceived) to the firm. Offering low-cost credit is likely to increase the rewards.

Export promotion is necessary. Here are some suggestions: Since exporting competence is crucial, the Department of Commerce could sponsor a Professional Certification in Exporting to be taught in Business Schools and Community Colleges. Liberal arts students should incorporate some international business education in their programs. Exporting must become of the national game plan, just as it has been for decades in Japanese and German society and is now in China. The time is right for such an initiative.

States could rally annual competitions for the best case study written on an export entry success. Such studies should present an export problem which was solved. Just like the peer reference power of adolescents, companies need concrete success stories they can read about to convince them that exporting is worth pursuing. Such case work should involve support from the U.S. Commercial Service, Export Assistance Centers and Chambers of Commerce.  Hundreds of short cases a year could be added to national resource centers. Available on line, these cases could help in training swaths of interested people.

Congress might consider the development and implementation of an “Export Impact Statement” in connection with major policy decisions. Export trade considerations should also become an integral part of foreign policy negotiations instead of just an afterthought. It must be recognized that successful international trade leads to a strong U.S. economy, which in turn is the necessary prerequisite for this country to remain the guarantor of its political achievements.

Finally, budget issues need to be considered. To be first class in international trade cannot be done on a shoe string. We need to invest in our export knowledge, processes and capabilities. The native American proverb says: “When storms come about, little birds seek to shelter, while eagles soar. “ We should help our exporters to become eagles.

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 U.S. Department of Commerce.  He can be reached at cjs29@georgetown.edu.

Author Infomation

Moderator
Moderator
  • 0

    jinjapan

    i didn't know america made anything to export. besides corn that is ;-)

  • 0

    theFu

    With President Obama, it probably means the increase will come from non-pirated Hollywood movies once ACTA http://en.wikipedia.org/wiki/Anti-CounterfeitingTradeAgreement is ratified. Hollywood believes they are losing half their revenue from piracy, especially from overseas. There is a strong belief in the states that Hollywood has him in their pockets.

    And they will export more corn too, assuming ACTA agreements are signed by every country so Monsanto-based grains can be exported too. ACTA has far reaching impacts for the entire world.

  • 0

    thepro

    The world is getting poorer. Who's going to be buying all these things?

  • 0

    guest

    i didn't know america made anything to export. besides corn that is ;-)

    The guts of your computer plus the software is American, dude.

  • 0

    ronaldk

    "German exports in 2009 were $13,670 for every man, woman, and child. The figure for Japan was $4,063; for the United States, it was only $3,238"

    U.S. exporting only slightly less than Japan, doesn't seem bad at all. Basically the issue is too many imports. Also, this author seems to ignore that Japan is also not exporting much compared to Germany. Finally, what about the other 170 odd countries? How much do they export per capita?

  • 0

    manfromamerica

    Obama has announced alot of things... he's a joke.

  • 0

    jinjapan

    guest** , so, america will double its exports of computer guts & software. cool . oh right. export them to china to be assembled.

  • 0

    Junnama

    I hope that actual report they prepared for congress had better suggestions than this...

  • 0

    Akuma

    "German exports in 2009 were $13,670 for every man, woman, and child. The figure for Japan was $4,063; for the United States, it was only $3,238"

    Something to think about... Population.

    USA. 310,000,000

    Japan. 127,000,000

    Germany. 81,000,000

    We all know how almost everything around us in made in China these days but I wonder what their per capita numbers are with their population of 1,350,000,000 ??? About 40 cents ???

  • 0

    Akuma

    " jinjapan at 08:00 AM JST - 21st May

    i didn't know america made anything to export. besides corn that is ;-)"

    Well then maybe you need to go back to school... Here's a few things you may have missed after dropping out of school.

    US Exports. Top Ten 2009.

    Civilian aircraft … $74 billion (Yes that plane you fly home on was probably made in USA)

    Semiconductors … $50.6 billion (Yep, the puter you typed your post on probably had many of it's parts made in the USA)

    Passenger cars … $49.6

    Medicinal, dental and pharmaceutical preparations … $40.4 billion

    Other vehicle parts and accessories … $39.9 billion

    Other industrial machinery … $38.1 billion

    Fuel oil … $34.9 billion

    Organic chemicals … $33.4 billion

    Telecommunications equipment … $32.9 billion

    Plastic materials … $31.6 billion...

    See corn isn't even in the top ten..

    Man these jealous America hater truly should think before they type ;-)

  • 0

    goddog

    Learn the language of the places you want to export, and life will be much easier!

  • 0

    Junnama

    I might suggest reversing 40-odd years of anti-export policy as a good start...

    Unless of course like the authors you believe US businesses are the problem...

  • 0

    maxtheitpro

    I must concur: The US makes excellent planes. I came to East Africa from Canada via Amsterdam on a sleek, beautiful Boeing 777 owned by KLM. That plane has soooo many kool features, and I just felt safe in it. I'd rather walk if I had to fly a Soviet jet or something "made to fly" from China. Long live Boeing. :-)

  • 0

    jinjapan

    akuma thanx for the lesson. ever hear of sarcasm??

  • 0

    maxtheitpro

    BTW, Obama should come back to his father's homeland here in Kenya (specifically Nyanza area of Western Kenya) and he will realize that Kenya does NOT want to import more goods from the West. Instead, they want to EXPORT more agricultural produce, finished goods based on the country's plentiful raw materials, fish, more tourism to see lions, giraffes, elephants, rhinos, etc. and more Business Process Outsourcing. I imagine other developing countries in Africa (and around the world) are looking to do the same thing too.

    This thing called TRADE (with surpluses & deficits) can be a very tricky thing. In the end, I think it's better for all countries to try as much to meet their own domestic demands and then IMPORT whatever else is absolutely necessary. One other thing...Africa does NOT want Monsanto's over-priced genetically modified seeds that locks in farmers and destroys their land. Send those exports some where else -- please.

  • 0

    Midnightpromise

    Does anyone even listen to this guy anymore?

  • 0

    Sarge

    "How can the U.S. achieve such a goal?"

    Ask Obama - he's the expert.

  • 0

    palisadez54

    Not only does the U.S. export products, but also inventions: that cell phone you decorate, that microwave oven to warm up that bento, that internet to surf porn, that computer for work, that zipper to keep others from looking, that air conditioner to keep you cool...and those traffic cones you see everywhere, lol.

  • 0

    TumbleDry

    guest: The guts of your computer plus the software is American, dude.

    On my computer, "Designed by Apple in California Assembled in China" is printed.

    I'm quite bad in geography, in which US state is Bangalore?

  • 0

    Sarge

    "Designed by Apple in California"

    I'm quite bad in geography, in which country is California?

  • 0

    GW

    I think we will soon have to re-think how all this trade goes down, there is no way the world as a whole can keep up the insane pace of the last 20yrs without imploding or exploding or both.

    Its soon going to be time to tame this rat race down otherwise the $%&# will hit the fan & we will all suffer bigtime.

  • 0

    TumbleDry

    Sarge: If you consider immaterial things (such as ideas) exportable, doubling exports will more than easy... So far my computer is made in China... My softs are mostly written outside US.

  • 0

    guest

    hahahaha-week like seven days.

  • 0

    DentShop

    American ideas and technological innovation are still the envy of the world. I am seriously hoping clean energy solutions will soon become a top American earner. It would be nice if it wasnt instantly outsourced to China as soon as it is developed.

  • 0

    maxtheitpro

    "Sarge: If you consider immaterial things (such as ideas) exportable, doubling exports will more than easy... So far my computer is made in China... My softs are mostly written outside US."

    Well at least the USA is the world's BEST exporter of weaponry/armaments. Yeah, go America go!! Is this not good for the US economy? Milk that MIC (Military Industrial Complex) to the bones. The profits they make will be evenly redistributed in the economy -- me thinks. Nah, maybe not. :-)

  • 0

    maxtheitpro

    "American ideas and technological innovation are still the envy of the world."

    Especially innovation that relates to Shock & Awe and other kool stuff. :-) That's why Iran is probably trying to get ahold of some of that good stuff -- like nukes -- also invented in the USA. :-)

  • 0

    MeLuvULongTimes

    Pizza Hut EXTRA LARGE pizzas, KFC double downs, FIVE GALLON tubs of ice cream, Chittos, Dorritos, Twinkies and so on. Hell, just export obesity and finally defeat world hunger once and for all! /sarcasm ;O)

  • 0

    NuckinFutz

    "On my computer, "Designed by Apple in California Assembled in China" is printed."

    And then it was sent to the USA, packaged, and exported! Just think if it said "Designed in China. Manufactured in China." I'd be afraid to turn the thing on!

Login to leave a comment

OR
Undergraduate: Information session (April 9)

Undergraduate: Information session (April 9)

Temple University, Japan CampusContinuing Education / MBA

Special Offers

グローバルに
活躍したいあなたへ
外資系転職

バイリンガル人材の
ための求人サイト

見てみる

More in Opinions

View all

View all

Time
to Buy
in Japan

Find the perfect home today!

Search