Thursday, May 21, 2015

Passage of Trans-Pacific Trade Pact Will Increase U.S. Exports and Economic Growth

Since the beginning of the U.S. economic recovery in July 2009, the nation's gross domestic product (GDP) has expanded at a puny pace even though employment growth has been fairly strong. Offsetting the job expansion, there has been lethargic capital spending and productivity growth. During this time, GDP per hour worked (productivity) expanded at a compound annual rate of 0.7%, which is one-third that in a typical recovery, and less than one-half of the annual pace since 1964.

Tom Duesterberg of the Aspen Institute argues that the collapse of U.S. export leadership has contributed to this decline. He finds the U.S. is party to just two of the more than 400 regional free trade agreements that have come into effect since 1995.

As a result, World Bank and Eurostat data show the U.S. share of global exports have sunk from 14% in 2000 to approximately 9% in 2013.

Have weaker exports contributed to differentials among productivity growth for the states? Since 2009, the top 25 productivity growing states increased exports at almost twice that of the remaining 25 states. Over this period of time, North Dakota came in at the top for productivity growth and expanded exports by 34.5%. Meanwhile, Florida, the bottom productivity growth state, grew exports by only 13.1%.

Additional statistical analysis show a strong positive association among export growth, capital spending and productivity gains at both state and national levels. The data provides solid support for Congress to boost the nation's capital spending, economic competitiveness and productivity growth by immediately providing President Obama with fast track trade authority so the Trans-Pacific Partnership trade pact could be implemented.
Ernie Goss

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