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MassDevelopment In The News
Opportunities Abound In Bay State's Export Sector
July 18, 2005: Mass High Tech, by Robert L. Culver
Massachusetts' economy has faced some tough challenges - harder hit in the recession than most states, we've been slower to recover. It costs more to live here. Winters are cold, and the weather is unpredictable.
A look at the commonwealth's export sector, however, tells a different story; the story of a robust economy that is one of the nation's leaders in the global arena, a job generator that attracts international attention, and a sector where high tech thrives.
In 2004, Massachusetts' exports hit an all-time high of more than $21.8 billion. This breaks the record set in 2000, and is equal to 6.9 percent of gross state product. This figure represents a huge amount of Massachusetts-made products moving around the world.
The export sector is where growth is happening. Exports increased 17 percent last year over 2003; a gain 4 percentage points higher than the national average.
Massachusetts' export economy is not only robust, it's globalized. While traditional trade partners such as Canada, Japan and the United Kingdom remain among the largest importers, Massachusetts products are increasingly popular all over the world. Growth is particularly strong in The Netherlands and Asian markets such as China, Taiwan and Malaysia.
In total, Massachusetts businesses export to 206 different countries. This is an impressive number, but it also indicates a strong future for the state's exporters. The more trade partners we have, the less vulnerable the state is to recession in any one region of the world.
Massachusetts' leading position in cutting-edge technology is one of the strongest drivers of our vibrant export economy. AEA (American Economic Association), a national nonprofit research organization, calculated that Massachusetts' high-tech exports totaled $9.2 billion, or 42 percent of total exports. That number excludes biopharma and related sciences, which add another $3.6 billion. Combined, these sectors add up to more than 58 percent of the state's exports.
One of the most important effects is that exporting does not benefit just a few large multi-national corporations. The most recent data available from the International Trade Administration shows more than 10,000 companies exported from Massachusetts in 2002. Of these, 88 percent were classified as small- and medium-sized enterprises with fewer than 500 employees.
When Massachusetts goods find a market in the world, the world gets to know what Massachusetts businesses can do. Exports and foreign direct investment have a symbiotic relationship. Foreign direct investment is responsible for 6.5 percent of the state's total private industry employment, or one in 15 jobs in the state. Foreign-controlled companies employed 191,000 Massachusetts workers in 2002 and accounted for one-eighth of all manufacturing employment in the state.
All of these statistics are impressive, but what is most important is that the export market represents an opportunity for Massachusetts companies to grow and for companies around the world to see the value that Massachusetts' superior workforce and resources can add to their company.
Massachusetts is committed to helping businesses succeed in the export market, whether it is a small firm getting its feet wet or a seasoned international operator looking to reach new markets.
The Massachusetts Export Center and its sister agency, the Massachusetts Office of International Trade and Investment (MOITI), are great resources. MOITI promotes exports and foreign direct investment. The Export Center offers technical assistance, research and training in a variety of areas including strategic planning, market assessment, export logistics and regulatory compliance. The team has the knowledge and experience to help companies get started or expand their exporting. On average, clients report more than $25 million in new export sales each year as a direct result of Export Center assistance.
MassDevelopment has just announced the expansion of its export programs. MassDevelopment's Export Development Fund now offers direct loans including 100 percent financing for new equipment and leasehold improvements, freeing up capital for other expenses.
The world is looking to Massachusetts for innovative products of all kinds. We have the companies, the support and the momentum to continue making the globe our marketplace. The export sector offers a world of possibilities to Massachusetts companies. It's up to us to pursue them.
Robert L. Culver is president and chief executive officer of MassDevelopment, the state's finance and development authority.
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