Given the week’s bad news on US unemployment, there will be renewed and focused attention on what the government should be doing in response.
One fairy tale wish hope of the Obama administration is that exports, perhaps bolstered by a weaker dollar and (maybe) new trade agreements, will double in the next five years. Putting aside the likelihood of hitting that specific target, an interesting question to ask is just what kind of jobs a surge in exports would create.
Three economists at the US International Trade Commission gave an answer to this question in a column earlier this week:
Even though manufacturing is important in itself, the promotion of US exports is likely to generate more indirect jobs in wholesaling, transport, and professional services than direct jobs in manufacturing.
Right now about half of all US exports are in the manufacturing sector. But as the authors note, employment in the sector has shrunk by a fifth in the last fifteen years because technological improvements have reduced the need for workers (even as actual production has increased).
The economists simply doubt that exports can reverse this trend; on the other hand, they do believe exports would increase demand for jobs in the service sectors that are both “upstream” from manufacturing (financial and professional services) and “downstream” (transportation, wholesale). Here’s why:
For every good that is exported there are typically R&D efforts to design the product, financing and technological services to keep the factory running, wholesalers to sell the good, and transport services to ship it.
In other words, increasing exports would help the US to continue the employment trends it had going into the crisis:
Related links:
Can the US manufacture employment through exports? – VoxEU
Industry: trade deals vital to meet Obama’s export goal – Real Time Economics