International Trade and the Golden Triangle
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International Trade and the Golden Triangle

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  • The manner in which the downturn spread across the globe like a contagion shows that nations are economcially more integrated than ever and globalization will continue to be an integral driving force in the world economy.
  • Intrapreneur: a corporate executive who develops new enterprises within the corporation (Webster)
  • Leading factors: China GDP growth & for Europe: dollar depreciation
  • Exports are positive force for Texas: Texas can never compete with China/India but competitive advantage resides in high skilled jobs. Export-oriented jobs almost always are higher-wage than average.
  • Caveats: Global trade keeps a lid on inflation Global trade creates flow of ideas and promotes efficiency Unfettered capital creates greater foreign investment FDI may be one of only things to save US at present

International Trade and the Golden Triangle International Trade and the Golden Triangle Presentation Transcript

    • Amir Mirabi
    • Manager - International Business
    • Office of the Governor - State of Texas
    • Port Arthur Small Business Summit
    • Port Arthur, Texas
    • 28 Oct 2009
    Texas – Leader in the Global Economy
  • The Global Economy – Turmoil ?
    • The Bad & Ugly
    • Global economy has taken a severe hit - worst since WWII
          • World trade down 10 percent
          • US exports down 18 percent
          • Texas exports down 17 percent
    • “ Economic Flu” has hit all sectors & all nations in varying strains
          • Demand contraction has dealt a harsh blow
          • Unemployment plagues many
          • Credit is tight - limits spending
          • Lessons
          • Contagion validates integrated economies
          • Globalization is here to stay & more critical than ever
    Sources: WorldBank / Texas State Comptroller of Public Accounts / Federal Reserve Bank (Dallas)
  • The Global Economy – or Turnaround ? Sources: Kauffmann Foundation / Federal Reserve Bank (Dallas) / Moody’s Economy
    • The Good
    • Massive/unorthodox US & foreign monetary stimulus has spurred growth
    • Financial markets have stabilized
    • Wage and price inflation are subdued
    • Timing & speed of recovery is varying
          • Asia leading recovery
          • US in first stages of recovery
          • Europe lagging
    • Some nations & states more resilient than others
          • Texas has a strong economic umbrella
          • Driven largely by exports
    • Among US states, Texas has been at the forefront of globalization
          • Ranked #2 most globalized state
          • Houston & Dallas top 10 most international cities
          • Beaumont & Austin top 25
  • Source: Atkinson, Robert D. and Daniel K. Correa. “ The 2007 State New Economy Index: Benchmarking Economic Transformation in the States.” Kauffman Foundation and The Information Technology &Innovation Foundation The Global Economy – A Paradigm Shift Issue Old New Markets Stable Dynamic Scope of Competition National Global Organizational Form Hierarchal Networked Production System Mass Production Flexible Production Key Factor of Production Capital/Labor Innovation/Ideas Key Technology Driver Mechanization Digitization Competitive Advantage Economies of scale Innovation/Quality Relations Between Firms Go it alone Collaborative Skills Job-Specific Broad and Changing Workforce Organization Man “ Intrapreneur” Nature of Employment Secure Risky
    • Texas Ports Facts
    • Realities
      • Texas port activity has grown 2x as fast as US in last 10 years
      • 317 million metric tons of cargo annually
      • 17% of total US tonnage
      • 50% of all US foreign imports & exports
    • Benefits
      • Nearly 1 million jobs in Texas
      • $30+ billion in personal income for Texans
      • Business sales of $178 billion
      • Texas marine & intermodal transport account for $65 billion
    Sources: Texas Ports Association / Federal Reserve Bank (Dallas) Texas Ports – Creating Statewide Strength
    • A Key Economic Component
    • Texas is the largest exporting state in US - 7 th year in a row - $192 billion
    • Compared to US, Texas exports larger share of its output: 15% TX vs. 8% US
    • Compared to US, Texas jobs are more export-reliant and related:
        • Overall - 6.7% TX vs. 5.1% US
        • Manufacturing jobs - 23% TX vs. 20% US
        • Computer & Electronics jobs – 48% TX vs. 35% US
    • Diverse & Dynamic
        • Chemicals – S38.3 billion
        • Computers & Electronics – $35.2 billion
        • Machinery Manufactures - $27.3 billion
        • Petrochemicals & Coal-related products – $25.3 billion
    Source: Federal Reserve Bank (Dallas) Texas Exports – Making Texas Strong
  • Source: Federal Reserve Bank (Dallas) Texas Exports – Output Levels
  • Source: Federal Reserve Bank (Dallas) Texas Exports - Composition
  • Source: Federal Reserve Bank (Dallas) Texas Exports - Destination
  •  
  • Texas: The Business Capital
    • Texas has most Fortune 500 & 1000 HQ’s of any state - 64 & 113 companies
    • Texas ranked #1 for Corporate Site Selectors by Site Selector Magazine - 2008
    • Texas ranked as “Number One Place for Business ” by CNBC – 2008
    • Texas home to most 2008 Hispanic Business 100 of any state – 23 companies
    • Texas won Forbes Magazine “Best Cities for Jobs” - Houston, Austin, Ft. Worth
    • T exas won Fortune Magazine’s Nation’s 2008 100 Fastest-Growing Firms list
        • 25 companies in Texas vs. 18 in California
    • Texas chosen by Chief Executive Magazine as “ Best Place for Business ” –
        • 4 th year in a row (2005-2008)
    • Texas picked as 2007 “ State of the Year ” by Business Facilities Magazine
    • Texas home to 3 Major US Airlines – Continental, American and Southwest
    • Texas produced 1.29 million jobs in the last 5 years – #1 in US
    Source: Texas State Comptroller of Public Accounts
    • “ Texas has established a worldwide reputation for its open, positive attitude toward the business community. With a low tax burden, low living costs and government programs designed to help rather than hinder business, Texas is the perfect location for international companies.” – Gov. Perry
    Texas: The Investment Capital
      • T exas leads US in total FDI with ~ $85+ billion invested in last 5 years (2003-2008)
      • 2007 FDI into Texas was $11.8 billion creating nearly 5,500+ new jobs
      • Texas leads US in EU Commercial Property Investments ~ $51 billion
      • Texas ranked 49 th among states in its per capita state tax burden
          • No State Income Tax / No Corporate Tax
    • Texas had 3 rd lowest cost of living among states in 2008
    • Texas Ports handle nearly 51% of all US foreign imports & exports
    • Texas has largest US rail system (23,337 km) and largest road system (671,594 km)
        • More than 2x the size of California with 11,774 km in rail / 374,638 km in roads
    • Texas has most Ports of Entry than any other state – 28 total
        • Florida & N. Dakota tied for #2 with 22; California #3 with 21
    Source: Texas State Comptroller of Public Accounts
    • Texas top 3 in nation for total business & academic R&D - $15.86 billion
    • Texas top 3 in nation for science Ph.D.’s awarded – 1,930 doctorates
    • Between 2000-2008, Texas’ population grew more than 2x the US rate
      • 14.6 percent (Texas) versus 7.2 percent (US)
    • Texas has 5th-youngest workforce in the US, with a median age of 39.4 years
    • 45,000+ college-graduate workers moved from other states to Texas in 2007-8
    • Texas has 2x the US average of fully bilingual professionals in the workforce
    Texas: The Human Capital Source: Texas State Comptroller of Public Accounts
    • Texas ranks 2 nd for semiconductor manufacturing
    • Texas firms attracted $1.4 billion in venture capital for 2007
      • Nearly half - $684.3 million – allocated to Austin-based firms
    • Texas ranked 3 rd for number of investments into venture-backed companies
    • Texas ranked 2 nd for number of patents issued – 6,016 awarded
    • Texas has 900+ biotech and biomed firms representing nearly 29,000 workers
    • The world’s largest Medical Center is in Houston
      • 46 hospitals and universities – 12,000+ doctors - 75,000+ employees
    Texas: The Innovation Capital Source: Texas State Comptroller of Public Accounts
    • “ Texas is blessed with an abundance of technical, legal, financial and research expertise that can be deployed to meet the challenges of providing energy for a growing population and economy.”
    • Energy industry accounts for ~ 17% of the Gross State Product
    • Texas is the nation’s largest producer of energy
        • Accounts for 21.3% of total oil and 27.8% of total US gas production
    • Texas has ~ 24% of all US oil reserves and ~ 32% of all US gas reserves
    • Texas’ 23 refineries account for ~ 26% of all US refining capacity
    • Texas leads US in all renewable energies with largest wind generation capacity
        • Currently producing 27% of the national total renewable energy capacity
        • Enough renewable energy to power over 1.5 million Texas homes
    Texas: The Energy Capital Source: Texas State Comptroller of Public Accounts
    • Texas leads US with largest solar, wind and renewable energy capacity
      • Produces almost 2x the amount of California as a whole
      • #1 in Wind - producing nearly 3x as much wind energy as #2 Iowa and #3 California
    • Texas leads US with biomass, landfill and plant-derived fuel production
      • 75+ trillion BTU of biomass energy
    • Texas is the nation’s largest producer of “biodiesel”
      • 187 million gallon capacity per annum / 73 million produced in 2007
    • Recent Renewable Energy Generation Statistics (Megawatt Hours)
        • Wind 7,907,000 MWh
        • Wood & Derived Fuels 900,888 MWh
        • Hydropower 661,971 MWh
        • Landfill Mass 218,813 MWh
        • Biomass 43,516 MWh
    Texas: The Renewables Capital Source: Texas State Comptroller of Public Accounts
    • “ Texas is a hub for world trade, linking North, South, East and West –
    • an ideal location for international commerce”
    • 2008 Texas GSP is $1.245 Trillion - Up 4.2% from 2007 vs. 1.9% for US
          • Represents 12 th largest economy in the world
    • Texas is the leading exporter in the USA - 7 th year in a row
    • Texas exports swelled from $168.2 billion in FY07 to $192.14 billion in FY08
          • California a distant second with $144.8 billion
    • Chemicals were Texas’ most important export - $38 billion
          • Computers and Electronics 2 nd most important export - $35 billion
    • Foreign-owned firms directly employ 368,200 Texans
          • EU countries directly employ 198,000 Texans
    Texas: The Trade Capital Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • Bi-Lateral trade between Texas and the World ~ $522 billion
    • Export trade with the following countries:
            • 2007 2008
          • Mexico $56.0 billion $62.1 billion
          • Canada $16.9 billion $19.2 billion
          • China $8.27 billion $8.45 billion
          • South Korea $5.56 billion $5.16 billion
          • Netherlands $5.29 billion $7.06 billion
          • Taiwan $5.08 billion $3.88 billion
          • Singapore $4.52 billion $5.46 billion
          • Brazil $3.90 billion $5.96 billion
          • Japan $3.44 billion $3.63 billion
          • U.K. $3.27 billion $3.54 billion
    Texas: Trade with the World Source: US Department of Commerce
    • “ Bi-Lateral trade is an essential part of our
    • national and local economies”
    • Did you know:
      • International trade generates nearly 30% of US GDP
      • 95% of retail and commercial consumers live outside of the US
      • 97% of US exporters are SMEs, and exports directly support over 12 million jobs in the US and support millions more indirectly
      • Imports keep inflation low and expand consumer choice and quality
      • Foreign companies in the US directly employ 5.1 million Americans and support millions more indirectly
    Benefits of International Trade Source: US Chamber of Commerce
    • Trade Means Jobs
      • Global demand for $192+ billion in Texas-produced goods directly generates nearly 500,000 jobs
      • Export-supported employment related to manufactured goods accounts for nearly 1 of every 18 private sector jobs in Texas
      • Over 30,000 businesses in Texas sell their products overseas - and they all employ Texans !
      • 92% of Texas businesses that export are SME’s
      • There are over 350,000 Texans employed by foreign companies
            • EU-Affiliated firms alone employ nearly 200,000 Texans
    What International Trade Means to Texas Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • Trade Means Revenue
      • Sales revenue generates jobs and supplements the state tax base, which funds community assets like roads and schools
      • $128.8 billion in Texas manufactured goods - representing ~15% of the total state economy - are exports
      • FDI into Texas in 2007 was $11.8 billion directly creating nearly 5,000+ new jobs
      • Total FDI into Texas over the past five years ~$85+ billion
      • Texas leads US in EU Commercial Prop. Investments ~$51 billion
    What International Trade Means to Texas Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • “ As a hub for world trade, Texas links North and South, East and West serving as an ideal location for international commerce and a major center for foreign investment”
    • From 2001-2007, Texas exports to Latin America rose by 49.2 percent to $73.2 billion in 2007
    • Texas imported $245.2 billion in products from other nations in 2006
        • Mexico accounted for more than half of that amount, at $124.0 billion
    • U.S. affiliates of Latin American companies employed 50,000+ Texans, including 15,000 Texas manufacturing jobs
    • LatAm accounted for 9 percent of total Texas FDI or ~$7.5 billion
        • $346 million in commercial properties
    Texas: Gateway to Latin America Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • “ As a hub for world trade, Texas links North and South, East and West serving as an ideal location for international commerce and a major center for foreign investment.”
    • From 2001-2007, Texas exports to China rose by 424.3 percent to $8.3 billion in 2007
    • Texas imported $245.2 billion in products from other nations in 2006
        • China ranked second as importer with $15.9 billion in imports
    • U.S. affiliates of Asia-Pac companies employed 42.000+ Texans
    • Asia-Pac accounted for 14 percent of total Texas FDI or ~$11.8 billion
        • $1.9 billion in commercial properties
    Texas: Gateway to Asia Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • Common Misconceptions
      • Company has to be large
      • Company must have an in-house legal , marketing & export dept’s
      • Company must have substantial trade volume
      • Company officials must be fluent in foreign languages
    What are the Common Exporter Mistakes?
    • Making the Export Decision
      • Obtain qualified export counseling and develop a master international strategy and marketing plan
      • Sufficient commitment by top management
      • Concentrate on one or two geographical areas and establishing a basis for profitable operations and orderly growth
      • Sufficient care in selecting overseas sales and public relations representatives and distributors
      • Do Not Assume that a given market technique and product will be successful in all countries
      • Must be willing to modify products to meet regulations or cultural preferences of other countries
      • Consider the possibility of appointing an export and marketing management company
    The ‘How’ of Exporting
    • Best Practices of Successful Exporters
      • Select Attractive Markets
      • Leverage US Customer Relationships
      • Select Partners (Distributors, Reps, Agents, etc.)
      • Understand Culture and Invest in Personal Relationships
      • Protect Intellectual Property
      • Reduce Payment Risk
    How Texas Companies Achieve Success
      • The Governor’s Office of Economic Development & Tourism functions as the lead state agency for economic development working in partnership with businesses and local communities to promote economic prosperity and job growth for Texas
      • Our customers are the citizens of Texas, economic development and tourism organizations, businesses, communities, gov’t entities and elected officials
      • Financial incentive packages are custom-designed to meet the needs of both the company and community
      • CEOs and top-level executives work with Governor’s Office to negotiate future business expansion and relocation prospects
    Texas Governor’s Office - EDT
    • The Office of International Business provides the following:
      • Trade Shows, Events and Missions
      • Export Counseling & Advocacy
      • Collection and Dissemination of Trade Leads
      • Trade-Related Market Research and Analysis
      • State of Texas - Mexico Office
    How the Governor’s Office Assists
    • US Commercial Service
      • Mission is to promote the export of goods & services from the US to foreign markets
      • 158 Offices worldwide / 108 Export Assistance Centers in US – 7 in Texas
      • Assistance with:
            • Market Research & Advocacy
            • Export Licensing & Documentation
            • Product Standards & Compliance
            • Tariffs, Taxes & Rate Schedules
    Who Texas Partners With
    • Other Partners
      • DECs (District Export Councils) – 4 in Texas
      • USDA Foreign Agricultural Service
      • EXIM (Export-Import) Bank
      • OPIC (Overseas Private Investment Corporation)
      • SBDC Network (Small Business Development Centers)
      • ITC (International Trade Centers)
      • Local Chambers of Commerce / City Offices
      • Congressional Offices / Consulates
    Who Texas Partners With
    • EXIM Bank http:// www.exim.gov
    • Small Business Administration http:// www.sba.gov
    • US Customs http:// www.customs.ustreas.gov
    • US Dept. of State http:// www.state.gov
    • Overseas Private Investment Corporation http:// www.opic.gov
    Helpful Websites
    • United States Department of Commerce http://www.us-doc.gov
    • US Commercial Service http:// www.buyusa.gov
    • District Export Councils http:// www.exporttexas.com
    • Office of the Governor http:// www.texasone.us
    Helpful Websites
    • Texas Enterprise Fund
    • Emerging Technology Fund
    • Texas Enterprise Zone Program
    • Texas Capital Fund Infrastructure Program
    • Texas Capital Fund Real Estate Development Program
    • Rural Municipal Finance Program
    • State Sales and Use Tax Exemptions
    • Texas Industry Development Program
    • Texas Leverage Fund
    • Texas Economic Development Act
    • Ad Valorem/Property Tax Exemption
    • Economic Development Refund
    • Renewable Energy Incentives
    • Moving Image Industry Incentive Program
    State Incentives & Programs
    • $377+ million in funds appropriated
      • Deal closing fund
      • Jobs driven - Wages should exceed county average salary
      • Repayment formula based on sales tax generated from wage expenditures
      • Substantial job creation and high wages (usually 100+ jobs)
      • Significant capital investment
      • Financial participation from the city, county and/or school district; in the form of incentives & abatements
      • Secure financing in place
      • Used when there’s competition with another state
      • Requires unanimous approval of the Governor, Lt. Governor and Speaker
    • TEF has generated 53,950 new jobs and $14+ billion in capital investments
    • MARTIFER (Portugal) awarded ~$1 million (Sep 2008)
      • $40 million Wind Tower Plant investment / 225 jobs in San Angelo, TX
    Texas Enterprise Fund (TEF)
    • Expedites development and commercialization of new technologies
    • Created in 2005 and re-appropriated in 2007
    • Commercialization Grants:
        • Provides elected early-stage investment in new, technology-based, companies that collaborate with public or private institutions of higher education in Texas
    • Matching Research Superiority Grants:
        • For acquisition of top talent for companies collaborating with Texas higher education institutions
    • Grants:
        • Assists companies in leveraging State funds to match Federal grants
    • ETF has allotted $140 million to 90+ projects
    Emerging Technology Fund (ETF)
    • Texas unemployment rate consistently lower than the US rate
        • 33 months of lower unemployment than US - currently 8.2% TX vs. 9.8% US
    • According to 2008 FDIC Report, Texas banks are the healthiest in nation
    • Texas foreclosures one of lowest in the US with 1 in every 838 homes
    • Comparable foreclosure rates in other states include:
        • Nevada - 1 in 62 homes
        • Florida - 1 in 140 homes
        • California - 1 in 144 homes
    Texas: Positive Economic Outlook Source: Texas State Comptroller of Public Accounts / US Department of Commerce
    • In FY08, Texas gained 93,500 jobs – #1 in US
          • This represents over 59% of all job gains in US
          • More than all 49 other states combined
          • Houston 22,500 jobs - Austin 9,900 jobs - San Antonio 4,800 jobs
    Texas: Positive Economic Outlook Source: Texas State Comptroller of Public Accounts / US Department of Commerce State Job Growth – Top 10 States State Net Jobs Texas 93,500 Oklahoma 19,600 Louisiana 12,400 Wyoming 9,000 Washington, DC 6,400 North Dakota 6,200 Alabama 4,800 Kansas 3,300
    • As stated by The Economist magazine:
    • “ The future is Texas. If you want to see where America should be heading, start by studying Texas. ”
    • ____________
    • As recently stated by Governor Rick Perry:
    • “ By reaching across borders, Texas’ entrepreneurs have made the Lone Star State a lynchpin of international trade, creating new opportunities for Texans and their worldwide partners alike.”
    What It All Means
  • Texas is Number One
    • Amir Mirabi
    • Manager - International Business
    • Office of the Governor - State of Texas
    • 221 East 11 th Street, 4 th Floor
    • Austin, TX 78702
    • Tel 512.936.0213
    • Fax 512.936.0080
    • [email_address]
    Contact Information