~ VASSEY AND DUVAL: INTERNATIONAL TRADE IS VIRGINIA’S BEST ECONOMIC DEVELOPMENT OPPORTUNITY ~
February 1, 2016
The call to diversify Virginia’s economy away from a reliance on federal spending is not new, but it has grown louder in recent years. Virginia was cushioned from the worst of the recession in a large part because of federal and defense spending, but with sequestration, we have seen the other side of that coin. Our growth rate in terms of job creation and GDP has been stagnant, and is expected to continue to lag behind the national average in the near future. Some regions of the commonwealth have yet to recover all of the jobs lost in the recession.
A bright spot, however, can be found in international trade. Virginia’s economy has become increasingly export-oriented. According to the Brookings Institution Export Monitor, export share of the Virginia economy has increased from 5.6 percent to 7.8 percent over the past 10 years. Since the recession, exports have driven nearly 30 percent of Virginia’s economic growth. That growth has occurred statewide, with the greatest export share of GDP occurring in Southwest Virginia, Harrisonburg, Blacksburg and Staunton.
We have a uniquely valuable asset in the Port of Virginia, which is the only port on the East Coast that exports more container volume than it receives. International exports from Virginia totaled $36 billion in 2014, sustaining 321,000 jobs and delivering $2 billion in state and local taxes. Exports support good-paying jobs with an average annual income above the state average at $58,000.
The anticipated expansion of the Panama Canal and the prospect of new international trade agreements opening up new markets for Virginia goods and services make it all the more possible for Virginia to capitalize upon its existing infrastructure and resourceful business community to lead an economic expansion through international trade.
Del. Steve Landes has proposed legislation to establish a public-private partnership to strengthen Virginia’s existing international trade development programs and to better coordinate state, federal, regional and local resources devoted to trade.
The Virginia International Trade Authority is modeled after the successful establishment of the Virginia Tourism Corporation in the 1990s. Its mission will be to generate opportunities for small- and medium-sized businesses to find new markets, increase international sales and create Virginia jobs. These firms often produce goods and services that have a demand abroad, but lack the resources to understand how to find those markets and establish trading relationships. With 81 percent of economic growth expected to occur outside the United States over the next five years, Virginia must be ready to find opportunities in new and growing markets.
When the Virginia Chamber Foundation commissioned an independent study to assess Virginia’s existing state led trade programs last year, the study’s author concluded that “Virginia has established a strong platform on which to build a next generation international trade program.”
The Virginia International Trade Authority will build on the state’s successful trade programs including the Virginia Leaders in Export Trade (VALET) Program, Going Global Defense Initiative (GGDI), Virginia International Trade Alliance (VITAL), international trade missions and international consultant network. Some of these programs have experienced waiting lists for several years. The authors of the Virginia International Trade profile found Virginia’s export promotion programs stood out as a national model, noting that “In no state has the feedback from business leaders involved with state export programs been as uniformly positive as in Virginia.”
The new trade authority will also have the flexibility to better support other local and regional programs such as the trade programs started by the City of Norfolk, the Virginia Coalfields Economic Development Authority and the metropolitan Richmond export initiative led by VCU and the Greater Richmond Partnership.
The Virginia International Trade Authority proposed by Landes could be a national model and position us to meet Governor McAuliffe’s goal to add 14,000 international trade-supported jobs and increase exports of products and services by $1.6 billion by 2020.
A strong, diverse economy in Virginia starts with establishing new markets for our world-class goods and services. That’s why the Virginia Chamber of Commerce, the Virginia Manufacturers Association and the Virginia Maritime Association, representing thousands of Virginia businesses, support the creation of the Virginia International Trade Authority. This authority will support private-sector businesses as they seek to compete internationally and build the new economy.
Brett Vassey is president and CEO of the Virginia Manufacturers Association; contact him at email@example.com.
Barry DuVal is president and CEO of the Virginia Chamber of Commerce; contact him at (804) 644-1607 or firstname.lastname@example.org.
This article originally posted on the Virginia Chamber website February 1,2016.