International Trade and its Regional Impact

Dr. David J. Molina

University of North Texas

International Trade and its Regional Impact

Late House Speaker Tip O’Neill was known to say “All politics is local”

Well it is not difficult to make the argument that all international trade activity is local (and in particular exports and inflow of FDI)

Wheat Trade Embargo under President Cater Lockheed’s contracts with Saudi Arabia are very

important to Ft Worth, Texas

At the National Level

Among the many measurements two commonly used are:– Measure of Trade Openness ratio of

Exports over Gross Domestic Product– Trade Exposure ratio of the Sum of

Exports and Imports over Gross Domestic Product

At the State Level

We have estimates of State Exports and GSP

Exports at the State and Local level determined by either– Origin of Movement– Export Location – Customs Districts

Imports

Measure of Trade Openness State

Ratio of Exports to GSP Export data from International Trade

Administration GSP – BEA Total Exports

7

24

10 10 9

25

11

6

9

26

11

5

9

26

10

6

8

24

12

76

22

15

8

0

5

10

15

20

25

30

Nu

mb

er o

f S

tate

s

2000 2001 2002 2003 2004 2005

Year

Number of States with Varying Degree of Trade Openness

(Annual Percentage of Exports to National GSP) Less 3% 3% to 6%

6% to 9% Over 9%

8.01% 7.27%

6.67% 6.64% 7.02% 7.29%

Top 5 States with Top Level of Trade Openness and Greatest Trade Exports

STATE % of Exp

to GSP

STATE Exp in $Billions

Vermont 18.33% Texas 128.8

Washington 14.33% California 116.8

Texas 13.11% New York 50.5

Louisiana 11.56% Washington 37.9

Kentucky 10.61% Michigan 37.6

Sources: Trade Statics, BEA and computations by author

Bottom 5 States with least Trade Openness

and least trade exports

STATE % of Exp

to GSP STATE

Exp in $Billions

Rhode Island 2.90% Hawaii 1.03

Wyoming 2.44% South Dakota 0.94

Montana 2.38% D.C. 0.83

Hawaii 1.91% Montana 0.71

D.C. 1.00% Wyoming 0.67

Sources: Trade Statics, BEA and computations by author

New EnglandConnecticutMaineMassachusettsNew HampshireRhode IslandVermont

MideastDelawareDistrict of ColumbiaMarylandNew JerseyNew YorkPennsylvania

Geat LakesIllinoisIndianaMichiganOhioWisconsin

PlainsIowaKansasMinnesotaMissouriNebraskaNorth DakotaSouth Dakota

South EastAlabamaArkansasFloridaGeorgiaKentuckyLouisianaMississippiNorth CarolinaSouth CarolinaTennesseeVirginiaWest Virginia

South WestArizonaNew MexicoOklahomaTexas

Rocky MountainColoradoIdahoMontanaUtahWyoming

Far WestAlaskaCaliforniaHawaiiNevadaOregonWashington

Regional Trade Openness

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

New England

Mid East Great Lakes Plains South East South West

Rocky Mountain

Far West

Region

Per

cen

t2000

2001

2002

2003

2004

2005

Trade Openness in the South West

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Arizona New Mexico Oklahoma Texas

State

Per

cen

t

2000

2001

2002

2003

2004

2005

Trade Openness With NAFTA

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

New England

Mideast Great Lakes

Plains SouthEast

SouthWest

RockyMountain

Far West

Region

Per

cen

t2000

2001

2002

2003

20042005

Trade Openness With NAFTA in the South West

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

Arizona New Mexico Oklahoma Texas

Per

cen

t2000 2001 2002 2003 2004 2005

State

New EnglandConnecticutMaineMassachusettsNew HampshireRhode IslandVermont

MidAtlanticNew JerseyNew YorkPennsylvania

Geat LakesIllinoisIndianaMichiganOhioWisconsin

PlainsIowaKansasMinnesotaMissouriNebraskaNorth DakotaSouth Dakota

South AtlanticDelawareDistrict of ColumbiaFloridaGeorgiaMarylandNorth CarolinaSouth CarolinaVirginiaWest Virginia

East South CentralAlabamaKentuckyMississippiTennessee

West South CentralArkansasLouisianaOklahoma

MountainColoradoIdahoMontanaNevadaUtahWyoming

PacificAlaskaHawaiiOregonWashington Border

ArizonaCaliforniaNew MexicoTexas

Trade Openness With Mexico

1988 1989 1990 1991 1992 1993 1994 1995 1996

New England 0.11 0.12 0.14 0.17 0.19 0.20 0.24 0.17 0.19

MidAtlantic 0.16 0.19 0.19 0.21 0.21 0.19 0.23 0.16 0.19

Great Lakes 0.29 0.36 0.35 0.41 0.42 0.38 0.45 0.46 0.49

Plains 0.28 0.26 0.22 0.25 0.30 0.29 0.35 0.27 0.36

South Atlantic 0.10 0.13 0.17 0.18 0.21 0.21 0.26 0.22 0.26

East South Central 0.12 0.17 0.18 0.20 0.23 0.23 0.29 0.24 0.27

West South Central 0.40 0.47 0.45 0.41 0.51 0.38 0.52 0.39 0.61

Mountain 0.11 0.12 0.13 0.10 0.13 0.13 0.17 0.11 0.15

Pacific 0.12 0.15 0.13 0.21 0.39 0.24 0.32 0.17 0.25

Border 1.22 1.35 1.47 1.68 2.01 2.04 2.27 2.00 2.30

Border w/o Texas 0.53 0.60 0.62 0.72 0.90 0.88 1.01 0.90 1.01

Texas 2.80 3.09 3.42 3.82 4.44 4.50 4.93 4.25 4.93

Source: David J. Molina (2001). "Economic Dynamics in the U.S.-Mexican Border Region"

in U.S.-Mexican Economic Integration: NAFTA at the Grassroots" ed. John Bailey, U.S.-Mexican Policy Study Series,

Policy Report No. 11, UT Lyndon B. Johnson School of Public Affairs

Trade Openness With Mexico

2000 2001 2002 2003 2004 2005

New England 0.24 0.19 0.20 0.23 0.24 0.23

Mid Atlantic 0.28 0.28 0.25 0.22 0.25 0.26

Great Lakes 0.71 0.74 0.69 0.66 0.72 0.73

Plains 0.37 0.40 0.41 0.43 0.47 0.54

South Atlantic 0.38 0.34 0.30 0.31 0.33 0.31

East South Central 0.72 0.61 0.60 0.57 0.66 0.79

West South Central 0.72 0.65 0.69 0.69 0.74 0.81

Mountain 0.20 0.18 0.17 0.21 0.24 0.26

Pacific 0.25 0.30 0.20 0.24 0.34 0.38

Border 3.15 2.71 2.59 2.42 2.50 2.52

Non-Texas Border 1.49 1.32 1.23 1.11 1.20 1.19

Texas 6.57 5.46 5.32 5.02 5.06 5.10

Trade Openness With Mexico

1988-1996 2000-2005Percentage

Change

New England 0.17 0.22 30.05

MidAtlantic 0.19 0.26 33.24

Geat Lakes 0.40 0.71 76.56

Plains 0.29 0.43 51.52

South Atlantic 0.19 0.33 71.01

East South Central 0.21 0.66 206.33

West South Central 0.46 0.71 55.25

Mountain 0.13 0.21 63.67

Pacific 0.22 0.29 29.93

Border 1.82 2.65 45.85

Border w/o Texas 0.80 1.26 57.78

Texas 4.02 5.42 34.86

Measure of State Trade Exposure

Ratio of Exports plus Imports to GSP Export and Import Foreign Trade Data

from CENSUS by Customs District GSP – BEA

Trade Exposure in US and Texas

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

U.S. Total Texas

Nation/State

Per

cen

t

2000

2002

2003

2004

Issues with the construction of The measurement of Trade Openness at the

State Level National GSP is not equal to GDP

– DIFFERENCE:• EXCLUDES: compensation of Federal civilian and

military personnel stationed abroad and government consumption of fixed capital for military structures located abroad and for military equipment except domestically located office equipment

• GSP and GDP often have different revision schedules.

Issues with the construction of The measurement of Trade Openness at the

State Level Export Data

– Unallocated data decreasing but it still remains about 4%

– Only OM remains– Using North American Industry

Classification System (NAICS) percentage of Texas manufactured exports is 90% of GSP-manufacturing production