Minnesota’s exports continue to lag U.S. average

Minnesota used to brag about the state’s manufactured exports.

The following comes from the Minnesota Department of Employment and Economic Development’s 2004 annual report on exports.

Although state exports grew slightly slower than the nation’s 12.9 percent growth, Minnesota has long been outperforming national trends. Between 1998 and 2004, Minnesota manufactured export growth was 22.2 percent compared to U.S. export growth of 2.5 percent, adjusted for inflation.

Manufactured exports are things that are made, not grown, and exclude services such as travel.

And although they reached a record $18.4 billion last year, the growth rate of Minnesota exports has lagged the national average in five of the past six years. And in 2009, they beat the US average only by plunging a little less.

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Why care? Here’s what the 2011 report says:

Exports are critical to the state economy. Manufactured exports are responsible for an estimated 114,900 jobs in Minnesota, ranking 15th largest among all states, according to the International Trade Administration of the U.S. Department of Commerce (based on 2009 data). About 57,100 of these export-related jobs are in manufacturing, while another 57,800 export-related jobs are in other industries such as marketing and sales, transportation, and logistics – key sectors in delivering goods to export markets.

I’ve asked the folks at DEED if they have any theories on why the switch. I’ll update once I get a reply.

So, how bad is this lagging trend? The answer changes a lot depending on how far back you look.

If Minnesota’s export growth had matched the U.S. rate since 1999 the state’s factories actually would be selling less stuff overseas than they are now–$1.4 billion less. That would mean fewer export related jobs.

On the other hand, if Minnesota’s export growth had matched the U.S. rate since 2005, when Minnesota’s pattern of outperforming the U.S. changed, the state’s factories would have sold $3.5 billion more stuff abroad.

Bottom line? Nothin’ more than the obvious: better to outperform the US average than to trail it.

  • StatsGeek

    I think growth *rates* may be a little deceptive – as they do not account for the different sizes of the companies involved.

    If a very large company already exports 500 million widgets, and then exports an additional 25 million widgets, it will have a 5% growth rate.

    Meanwhile, a small company that already exports 25 million widgets and then exports an additional 5 million widgets has a 20% growth rate.

    So even though the *magnitude* of growth is larger with the large company, the small company has a larger *rate* because it is a smaller company. Clearly, the larger company is actually growing more – and the larger company is likely creating many more jobs than the smaller company.

    As industries and companies mature, they can not sustain exponential growth forever – but that doesn’t mean they can’t still keep growing.

    We should probably be looking at the *magnitude* of export growth per capita. This will probably give us a clearer picture of what has been going on.

    In these tough times, we should probably also look at employment growth, as new technology can sometimes cause exports to increase with little growth in employment.

  • Bill Catlin

    This is an interesting point. It’s true that the same growth in output will produce a different rate of growth in a small company compared to a large company. But I don’t think that’s what’s going on with exports.

    Think of the states as companies of different sizes. Texas ($231 billion) and California ($137.7 billion) are the big kahunas when it comes to exports. Way bigger than Minnesota’s $18.3 billion in exports. If greater size made it harder to show a higher growth rate, California and Texas would be the most hard pressed to beat the growth rate of much-smaller Minnesota. But that’s just what they did.

    From 2010-2011, the dollar value of exports from Texas grew 20 percent; California 10.6 percent. Minnesota? 7.1 percent.

    The same is true on a per-capita basis. Texas: 18 percent; California: 10 percent; Minnesota: 6 percent.

  • StatsGeek

    Bill,

    Thanks for the hard magnitude numbers – this is what I was looking for, and the original article did not include any.

    This does in fact suggest the MN export growth is slowing – which is probably not a good thing.

    So, if I may ask, what is the *per capita* growth rate and *per capita* magnitude of MN export growth vs. all other states and versus the nation? And what are

    This would give us rankings. We watch our export growth rate rankings as they go up or down.