International Trade Economic Forecasts An Overview of Orange County and Southern California Exports Mira Farka Adrian R. Fleissig Institute for Economic and Environmental Studies Orange County / Inland Empire Regional SBDC Network California State University, Fullerton December 1, 2011
Main Topics The Big Picture Global Economic Trends Regional Economy and International Trade Los Angeles Long Beach Santa Ana MSA Exports Orange County Exports: Analysis & Forecasts Exports by Countries and Regions Exports by Sector Data and Methodology
Global Economic Trends and International Trade
Global GDP in 2050: A Different World (trillions of dollars, adjusted for purchasing power parity) 60 56.8 50 40 30 20 10 41.4 2000 2010 2050 38.1 35.3 10.0 10.6 9.8 7.6 0 3.0 3.2 1.6 1.2 China India US EU Brazil Japan
Strength in Numbers: Asian Share of Global Middle Class Population Will Rise 70% (% of world middle class population) 66% 60% 50% 40% 30% 20% 28% 54% 2009 2020 2030 36% 22% 18% 14% 10% 10% 7% 0% Asia Pacific Europe North America
Majority of Spending by the Middle Class Will Come from Asia 70% (% of spending based on 2009 PPP dollars) 60% 50% 40% 30% 20% 23% 42% 59% 2009 2020 2030 38% 29% 26% 20% 17% 10% 10% 0% Asia Pacific Europe North America
50% 45% 40% 35% 30% 25% 20% 15% Export Contribution to GDP is Large in Main Economies, but not in the U.S. 47% 46% (exports as % of GDP) 40% 38% 27% 20% 18% 12% 10% 5% 0% Germany Asia EU China UK India Japan US
Exports Have Potential to Drive US Growth (percent contribution to GDP growth, 2010) Consumption 44% Gov. 5% Business Investment 65% Exports 48%
The Regional Economy and International Trade
Regional Economy Quick Facts LA LB SA MSA Population: 13 th largest in the world; 2 nd in the U.S., 1 st in CA As a separate state, ranks 6 th, ahead of Pennsylvania GMP (Gross Metro Product) 2 nd in the U.S., 1 st in CA As a separate country, ranks 17 th in the world ahead of Turkey Orange County Population: 6 th in the U.S., 3 rd in CA As a separate state, ranks 30 th, ahead of Iowa GMP: 16 th in the U.S.; 3 rd in CA As a separate country, ranks 45 th in the world ahead of Singapore
8.0% LA LB SA MSA is the 3 rd Largest Exporter in the U.S. (percent of total U.S. exports, 2009) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 6.6% 6.2% 4.9% 3.5% 3.0% 2.7% 2.7% 2.0% 1.9% 1.9% 1.0% 0.0% New York- Northern New Jersey- Long Island Houston- Sugar Land- Baytown Los Angeles- Long Beach- Santa Ana Seattle- Tacoma- Bellevue Miami-Fort Lauderdale- Pompano Beach Detroit- Warren- Livonia Chicago- Naperville- Joliet San Jose- Sunnyvale- Santa Clara Minneapolis- St. Paul- Bloomington Dallas-Fort Worth- Arlington
Los Angeles-Long Beach- Santa Ana San Jose-Sunnyvale-Santa Clara LA LB SA MSA is the Largest Exporter in CA; OC is 3 rd Largest (2009 level, millions of dollars) Orange County San Francisco-Oakland- Fremont San Diego-Carlsbad-San Marcos Riverside-San Bernardino- Ontario Sacramento--Arden-Arcade-- Roseville Oxnard-Thousand Oaks- Ventura El Centro 2,484 1,993 5,356 3,502 13,419 16,739 16,040 21,406 51,528 7.2% of GDP 14.4% of GDP 9.5% of GDP 5.0% of GDP 7.9% of GDP 5.2% of GDP 3.8% of GDP 7.2% of GDP 43.6% of GDP Bakersfield Fresno 1,778 1,660 0 10,000 20,000 30,000 40,000 50,000 60,000 6.4% of GDP 5.7% of GDP
Exports Support a Large Number of Jobs Nationally and Locally (thousands of employees) Region Jobs U.S. Total 9,200 U.S. Manufacturing 5,300 CA Total 1,560 CA Manufacturing 616 LA-LB-SA MSA 560
LA LB SA MSA is 1st in the Nation Based on Number of Jobs Supported by Exports (thousands of employees) Los Angeles-Long Beach- Santa Ana New York-Northern New Jersey-Long Island Chicago-Naperville-Joliet Dallas-Fort Worth-Arlington Detroit-Warren-Livonia Houston-Sugar Land- Baytown Boston-Cambridge-Quincy San Jose-Sunnyvale-Santa Clara 223 212 240 235 304 398 482 560 9.8% 5.6% 8.7% 10% 12.5% 8.9% 8.9% 22.7% Philadelphia-Camden- Wilmington Seattle-Tacoma-Bellevue 202 196 7.1% 10.7% 0 100 200 300 400 500 600
Exports Boost Economic Growth and Employment Economic Impact of Exports Every $1 billion increase in exports supports over 5,000 jobs Every $1 dollar in exports generates an additional $1.23 Exporting jobs Pay 15% higher wages than non-exporting jobs Offer 11% higher benefits than non-exporting jobs Exporting businesses are 20%-30% more productive than non-exporting firms Experience 20% more job growth than non-exporting firms 25% less likely to fail than non-exporting firms
Manufacturing is Key to Increasing Exports Exports and Manufacturing Output In the US, manufacturing makes up 67% of total US exports In CA, manufacturing makes up 87% of total CA exports CA Manufacturing exports rose 60% faster than CA economy Exports and Manufacturing Jobs Employment is stimulated more by export growth than GMP growth In the U.S., 22% of manufacturing jobs are supported by exports In CA, 25% of manufacturing jobs are supported by exports
25% U.S. is Still the Largest Manufacturer in the World (% of global manufacturing) 20% 15% 10% 5% 4.8% 1980 1990 2000 2008 18% 10.7% 11.2% 9% 7% 22.0% 21% 0% China Japan Germ any United States
But U.S. Export Intensity for Manufactured Products is the Lowest among Top 15 Countries 300 (Index level, World Average = 100) 250 200 150 100 World Average 50 0 Taiwan Germany Korea France UK Canada Italy Mexico Spain China India Japan US
450 LA-LB-SA MSA has the Largest Manufacturing Base in the Nation (thousands of employees) 400 350 300 250 200 150 100 389 325 225 183 177 174 171 156 155 155 50 0 Los Angeles Chicago Houston Detroid Minneapolis Dallas Seattle San Jose New York Orange County
LA-LB LB-SA MSA is well Positioned to Expand Exports since it has over 20,000 Manufacturing Firms in Exporting Industries Sector Jobs Businesses Average Salary Los Angeles County 389,302 14,000 55,765 Orange County 154,574 5,173 61,336
LA - LB SA MSA Merchandise Exports Analysis and Forecasts
LA-LB-SA MSA Total Export Volume Historical Data (billions of dollars) 60.0 54.4 51.5 48.7 43.8 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 70 60 50 40 30 20 10 0
LA-LB-SA MSA Exports Top Countries (2009 levels, billions of dollars) Mexico 8.9 Canada 7.1 Japan 5.1 China 5.0 South Korea 2.7 Hong Kong 1.9 U.K. 1.7 Germany 1.3 Taiwan 1.1 Rest of World 22.7 44% Canada 7.1 14% Mexico 8.9 17% China 5.0 10% Japan 5.1 10% S. Korea 2.7 5% Netherlands 1.1
22 20 LA-LB-SA MSA Exports by Region (2009 levels, billions of dollars) 19.2 18 16 14 12 10 8 6 4 16.1 8.2 2 1.8 1.5 0.6 - Asia NAFTA European Union South America OPEC Africa
LA-LB-SA MSA Exports by Sector (2009 levels, billions of dollars) Computer & Electronic Product 12.0 Transportation Equipment 10.6 Miscellaneous Chemical Machinery Food Petroleum & Coal Products Fabricated Metal Product Electrical Equipment & Appliance Apparel 3.9 3.7 2.9 2.3 2.0 1.5 1.4 1.2 Total Farm Primary Metal 1.1 0.8 0 2 4 6 8 10 12 14
LA LB SA MSA Export Profile Exports by Country Largest Exporter to South Korea (10%), China (9%), Taiwan (7%) 2 nd Largest Exporter to Japan (10%), Hong Kong (9%) Exports by Region Largest Exporter to APEC ($36 billion) and Asia ($19 billion) 2 nd Largest Exporter to NAFTA ($16 billion) Exports by Sector 2 nd Largest Exporter in Computers & Electronics (after San Jose) 2 nd Largest Exporter in Transportation Equip. (after Detroit)
90 80 70 60 50 40 30 20 LA-LB-SA MSA Total Export Volume 25.3 Forecasts (level, billions of dollars) 61.7 74.0 69.3 81.4 10 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
LA-LB-SA MSA Export Growth Forecasts (percent change, y-o-y) 25% 20% 15% 10% 5% 0% -5% -10% 11.6% 11.2% 11.7% 10.2% 19.7% 12.3% 6.9% 10.0% -15% -20% -14.1% 2005 2006 2007 2008 2009 2010 2011 2012 2013
35 30 25 20 15 10 LA-LB-SA MSA Export Forecasts Top 3 Regions (level, billions of dollars) 24.5 31.6 18.3 2010 2011 2012 2013 24.4 8.9 12.4 5 0 Asia NAFTA European Union
20 18 16 14 12 10 8 6 LA-LB-SA MSA Export Forecasts Top 3 Sectors (level, billions of dollars) Transportation Equipment Computer & Electronic Product Miscellaneous 12.0 10.6 18.2 17.1 6.7 4 2 3.9 0 2005 2006 2007 2008 2009 2010 2011 2012 2013
Orange County Merchandise Exports Forecasts and Analysis
Orange County Export Profile (2009, billions and shares of total) Largest trading partners Canada ( $2.1 billion; 13% of total) Mexico ( $2.6 billion; 16% of total) Largest trading Areas NAFTA ( $4.7 billion; 34% of total) Asia ( $5.7 billion; 41% of total) EU ( $2.4 billion; 17% of total) Largest Exports by Sector Computer & Electronic Products ( $3.8 billion; 23% of total) Miscellaneous Manufacturing ( $1.2 billion; 7% of total) Transportation Equipment ( $3.3 billion; 20% of total)
Orange County Total Export Volume: Historical Data (millions of dollars) 20,000 15,000 10,000 5,000 5,750 17,897 19,668 16,739 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
20% Orange County Exports Growth Historical Data (percent change, y-o-y) 15% 10% 5% 0% -5% -10% 13.4% 13.2% 13.2% 9.9% -15% -20% -14.9% 2005 2006 2007 2008 2009
Orange County Total Export Volume: 30,000 25,000 20,000 15,000 10,000 5,000 5,750 Forecasts (millions of dollars) 22,827 20,215 24,480 26,960 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Orange County Exports 25% Growth Rate Forecasts (percent change, y-o-y) 20.8% 20% 15% 10% 5% 0% -5% 13.4% 13.2% 13.2% 9.9% 12.9% 7.2% 10.1% -10% -15% -14.9% -20% 2005 2006 2007 2008 2009 2010 2011 2012 2013
Orange County Exports by Country
Orange County Top Trading Partners 25,000 are Similar to CA (CA exports, millions of dollars, 2010) 20,000 20,949 16,198 CA Exports by Country 15,000 12,469 12,180 10,000 5,000 8,027 6,757 6,518 5,122 4,181 4,126 - Mexico Canada China Japan South Korea Hong Kong Taiwan Germany United Kingdom Netherlands
Orange County Exports: Top 5 Countries ( 2009 levels, millions of dollars) Country Year 2009 Canada 2,097 China 1,460 Japan 1,485 South Korea 793 Mexico 2,629 Rest of World 8,272 Rest of World 8,272 48% Canada 2,097 13% Mexico 2,629 16% China 1,460 9% Japan 1,485 9% South Korea 793, 5%
50% 40% 30% 20% 10% 0% -10% -20% -30% 36% Orange County Export Growth Top 5 Countries (percent change, y-o-y) 2007 2008 2009 26% 9% 9% 7% 5% -23% -17% -16% 30% 14% -21% -11% 27% 13% Canada China Japan South Korea Mexico
OC Export Shares to China Have Grown Over Time 16% (% of Total Volumes) 14% 12% 10% 8% 6% 4% China Japan 2% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
4,500 Orange County Export Forecasts Top 5 Countries (level, millions of dollars) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 2,371 2010 2011 2012 2013 3,230 2,974 2,557 2,228 1,879 1,646 1,404 1,061 3,951 500 0 Canada China Japan South Korea Mexico
Orange County Exports by Region
Orange County Exports by Region 6,000 5,654 (2009 levels, millions of dollars) 5,000 4,000 3,000 2,000 1,000 4,727 2,410 532 447 180 - Asia NAFTA European Union South America OPEC Africa
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 OC Exports to NAFTA, ASIA and EU History and Forecasts (levels, millions of dollars) Asia NAFTA European Union 5,654 4,727 9,356 7,226 3,667 2,000 1,000 0 2,410 2005 2006 2007 2008 2009 2010 2011 2012 2013
Orange County Exports by Sector
Orange County Sector Exports are Similar to CA and are Concentrated in Manufactured Equipments (CA exports 2010 levels, millions of dollars) COMPUTER AND ELECTRONIC 43,064 MACHINERY TRANSPORTATION EQUIPMENT CHEMICALS MISCELLANEOUS AGRICULTURAL FOOD WASTE AND SCRAP ELECTRICAL & APPLIANCES 14,492 12,964 11,574 11,507 9,354 7,375 5,376 3,976 CA Exports by Sector PETROLEUM & COAL 3,686 FABRICATED METAL 3,564 PLASTICS & RUBBER 2,461-10,000 20,000 30,000 40,000 50,000
Orange County Exports by Sector (2009 levels, millions of dollars) Computer & Electronic Product 3,827 Transportation Equipment Miscellaneous Chemical Machinery Food Petroleum & Coal Products Fabricated Metal Product Electrical Equipment & Appliance Apparel 1,202 1,182 975 698 568 506 449 406 3,342 Total Farm Primary Metal 318 288 0 500 1000 1500 2000 2500 3000 3500 4000 4500
7,000 Orange County Exports Forecasts Top 3 Sectors (level, millions of dollars) 6,000 5,000 4,000 3,000 2,000 Transportation Equipment Computer & Electronic Product Miscellaneous 3,827 3,342 6,057 5,521 2,061 1,000 1,202 0 2005 2006 2007 2008 2009 2010 2011 2012 2013
Methodology e( x) = ( b a = ( b xa) e( x) = b xa i i T 2 i x) 2 ( b xa)
Methodology Regional, State, National International data Exchange rates Labor productivity U.S. growth (RGDP) Foreign growth (RGDP) Exports by industry Statistical & econometric modeling Nonlinear regression System of equations Model validation
Measures of Trade Data Origin-of-Movement (OM) Based on Origin State merchandise starts its journey to the port of export Exporter Location (EL) (1993-2002 previous data) Based on zip code of the exporter & captures company headquarters, wholesalers, brokers, and freight forwarders Customs District and Port Data Measure goods leaving district or port (regardless of where good originated in U.S.)
International Trade Administration U.S. Dept. of Commerce Data Availability Individual countries Trade and economic groups Geographic regions Product type and industry National Trade Data 1989-2010 State Export Data 1999-2010 U.S. Metro Area 2005-2009
Questions? Mira Farka efarka@fullerton.edu Adrian Fleissig afleissig@fullerton.edu