Chicago has long fancied itself a global city. Lately, it’s been developing the economy to match.
A report released Tuesday by the Brookings Institution, a Washington think tank, shines a light on the health of Chicago’s export market. Exports now account for 12.6 percent of the metropolitan area’s economy, up from 7.7 percent in 2003. While the economy slumbered in the post-recession years of 2009-2012, the annualized export growth rate marched on at 7 percent.
Unlike census data, which track goods by the point at which they leave the country, Brookings crunched the data based on point of production, giving less weight to port cities like Houston and Los Angeles. The report also took “service exports” into account — any service that’s bought by a foreign resident or company, including soft services like management consulting and IT royalties.
That means Chicago came out looking much better in the Brookings rankings, where its $66.2 billion dollars of exports in 2012 put it fourth in the country, behind Los Angeles, New York and Houston. In the census’ point-of-departure export numbers, Chicago ranks seventh.
Brad McDearman, one of the study’s three authors, says Chicago’s growth reflects a national trend that’s seen the repatriation of factories, spurred by a growing global middle class. “Chicago, like most cities, you’re at all-time highs right now. The U.S. is at an all-time high,” he says.
Though there’s been much handwringing about the rise of China, India and Brazil, rapid development in those markets has buoyed wages, diminishing competitive advantage while creating new consumers. According to the IMF, 85 percent of global GDP growth through 2018 will occur outside of the U.S.
While that’s testament to the creeping notion that U.S. economic influence is diminishing, such a shift also represents significant growth opportunities for American companies — global middle-class consumption is pegged to increase from $21 trillion in 2000 to $31 trillion by 2030, according to the Organization for Economic Development and Co-Operation. “You’re seeing places like a Honda factory in Columbus and a BMW factory in South Carolina not just building here but exporting out,” McDearman said.
Brookings is currently working with World Business Chicago, the city’s international development arm, to develop a plan to leverage the city’s assets to spur greater export growth. A major focus will be cutting red tape and getting the word out about the resources available to smaller operations. “Companies need help getting distributors and marketing partners, translating, understanding the whole system. Programs are there in Chicago, they’re just not tied together,” McDearman said. “You have federal, state, fragmented local programs. Small to midsized companies don’t know where to go.”