Building Export Capacity and Market Diversity is Everyone’s Business

It’s taken as a given that developing export capacity and securing customers in foreign markets will create jobs and promote economic growth. Thus every state in the United States, every province in Canada, and even many communities within states and provinces have export development and training programs that provide companies with the tools they need to access new markets.

The United States has, up until recently, relied upon state and local actors to do much of the heavy lifting on export training and development, while encouraging state and local government partners to work with the federal government via the U.S. Department of Commerce’s Foreign Commercial Service when the time comes for exporters physically to access overseas markets via searches for foreign partners, buyers, etc.

In 2010, however, the Obama Administration recognized the growing strength and important of overseas markets and launched the National Export Initiative to define and develop a sharper focus and a more strategic deployment of trade development resources at both the federal and state levels.

These efforts have made a difference. U.S. exports are growing and achieving record levels, despite weakness in many traditional markets and a pronounced slowdown in some of the more dynamic emerging markets in Asia.

The United States government’s enhanced focus on exports reflects a growing global recognition that exports are a critical component, or should be, of every government’s economic development efforts.

For a host of reasons, exporting is good for a company, and good for an economy.

In recent years much has been written about Israel’s booming technology economy (see, Start-Up Nation) but a recent article in Haaretz reflects the Israeli government’s concern that traditional export activity in that country is increasingly limited to a small, highly successful group of large companies. These companies, including such giants as Intel, HP, Teva, and Iscar, dominate Israel’s export statistics.

Indeed, the exports of just ten (10) major firms account for 47.7% of Israel’s total exports!

Even as their export successes inure to the benefit of the companies, the employees and the country as a whole, the dramatic lack of diversification and capacity among the larger export community is becoming an issue of real concern. A worsening of the fortunes of just one of these major exporting companies could ripple dramatically through the entire country.

For this and other reasons, there are increasingly loud and persuasive calls to increase funding for export capacity development and training, particularly among the SME (small and medium size enterprise) community.

Have a look at this discussion. The issues and challenges — and risks — facing Israel are playing out across any number of states, provinces and countries closer to us here at home.

Building export capacity and diversification is everybody’s business. A disproportionate focus on one market – or one industry sector – or the fortunes of but a few major players – can put an entire economy at risk.

The devil’s in the details, but the failure to take steps to build capacity and diversify markets comprises neglect that can beget serious economic consequences.