William A. Reinsch President, National Foreign Trade Council June - - PowerPoint PPT Presentation

William A. Reinsch President, National Foreign Trade Council June 25, 2007

Emerging Markets Now Number Among the World's Leading Technology Exporters

Source: Global Insight, Inc.

U.S. Multinationals Sell Three Times More Through Foreign Operations Than Through Exports

Source: U.S. Bureau of Economic Analysis

Global Firms Are Offshoring a Range of Corporate Functions

Source: A.T. Kearney, Foreign Direct Investment Confidence Index (2005)

CONSEQUENCES OF GLOBAL ENGAGEMENT

• JOBS AND SALES IN GLOBALLY ENGAGED AMERICAN FIRMS GROW

MORE STRONGLY AND STABLY.

• THEIR WORKERS ARE 5 TO 20 PERCENT BETTER PAID AND MORE

PRODUCTIVE.

• THE BIGGEST BENEFITS COME FROM CHOOSING TO COMMIT TO

GLOBAL LINKAGE IN THE FIRST PLACE; FURTHER BENEFITS SOMETIMES COME FROM DEEPENING THAT COMMITMENT, BUT THEY ARE SMALLER THAN THE INITIAL BENEFITS.

• EMPLOYMENT AND MARKET SHARES GROW OVER TIME FOR THE

GLOBALLY COMMITTED, BY SEVERAL PERCENT PER YEAR, IN THE PROCESS REJUVENATING ENTIRE INDUSTRIES.

• NOT JUST THE GLOBALLY ENGAGED FIRMS AND WORKERS

THEMSELVES, BUT ALSO THE COMMUNITIES IN WHICH THEY LOCATE EXPERIENCE HIGHER WAGES AND PRODUCTIVITY.

RELATIVE TO COMPARABLE NONEXPORTING PLANTS, PLANTS THAT HAVE BEEN EXPORTING SINCE THE LATE 1980S:

• Experienced 2 to 4 percentage points

faster annual growth in employment.

• Expanded their annual total sales about

0.6 to 1.3 percentage points faster.

• Were nearly 8.5 percent less likely to go
• ut of business.

Population Growth in Emerging Markets Outpacing Developed Countries

Source – Council on Competitiveness, 2007

Population Growth for Western Europe, Japan, and Russia 1995-2050

50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000 1 9 9 5 1 9 9 8 2 1 2 4 2 7 2 1 2 1 3 2 1 6 2 1 9 2 2 2 2 2 5 2 2 8 2 3 1 2 3 4 2 3 7 2 4 2 4 3 2 4 6 2 4 9 Year Population Westerm Europe Japan Russia

United States Population, 1980-2050

50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000 1 9 8 1 9 8 3 1 9 8 6 1 9 8 9 1 9 9 2 1 9 9 5 1 9 9 8 2 1 2 4 2 7 2 1 2 1 3 2 1 6 2 1 9 2 2 2 2 2 5 2 2 8 2 3 1 2 3 4 2 3 7 2 4 2 4 3 2 4 6 2 4 9 Year Population

China’s Economic Growth

• Average annual GDP growth of 14.8% since 1988. Still hovering around

10% per year, despite efforts to contain it.

• Global trade has grown from $20.6B in 1978 to $474.3B in 2000 to $1.7T

last year.

• After a long period of fairly balanced trade, they are starting to post large

surpluses -- $177 billion in 2006, nearly twice that projected for 2007.

• Total trade makes them 3rd or 4th in the world.
• Total foreign investment has grown from essentially zero to over $500

billion.

• Foreign exchange reserves have grown from $20.6B in 1992 to over $1

trillion, largest in the world. Some estimates are that they will add another $500B this year alone.

• We estimate $700B of that $1T is in US paper.

Most of the Gains in Income Have Gone to the Wealthiest Households

Source: U.S. Census, Income, Poverty, and Health Coverage in the U.S.: 2005 (Aug. 2006)

America’s Current Account Deficit Is Part of a Larger Global Imbalance

Source: Global Insight, Inc.