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 out 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 450,000,000 400,000,000 350,000,000 300,000,000 Population 250,000,000 Westerm Europe Japan 200,000,000 Russia 150,000,000 100,000,000 50,000,000 0 5 8 1 4 7 0 3 6 9 2 5 8 1 4 7 0 3 6 9 9 9 0 0 0 1 1 1 1 2 2 2 3 3 3 4 4 4 4 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Year

United States Population, 1980-2050 450,000,000 400,000,000 350,000,000 300,000,000 Population 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 1 4 7 0 3 6 9 8 8 8 8 9 9 9 0 0 0 1 1 1 1 2 2 2 3 3 3 4 4 4 4 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Year

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.