The United States is a large and diverse economy with a significant level of international trade. In recent years, the ratio has hovered around 25-30%, indicating that exports and imports combined account for about a quarter to a third of the country's GDP. The U.S. is a notable exporter of manufactured goods and agricultural products. It is among the world's largest exporters of aerospace products, machinery, pharmaceuticals, chemicals, and agricultural commodities.

Nonetheless, while the U.S. is a major player in the global economy, its level of dependence on international trade, measured by the trade-to-GDP ratio, is relatively moderate compared to some countries. Consequently, for the past 30+ year, U.S. states have supported their existing businesses with export development programs. Here are 7 reasons why:

Increased Employment: U.S. companies engaged in international business stimulate job creation in several ways. When businesses sell to international markets, they often hire more employees to supply the increased demand. Additionally, the logistic services required to move a product from a U.S. location to an international market creates jobs.

Economic Growth: As U.S. companies increase their international business, revenue increases and taxes paid to state governments increase.   This leads to a state’s overall economic growth, prosperity, and higher living standards.

Learning Opportunities: Engaging in international business provides valuable learning opportunities for U.S. companies, and by extension, citizens of the states in which these exporters operate. Employees acquire knowledge and best practices from other nations, adapt them to their own contexts, and leverage this learning for the benefit of their U.S. domestic industry.

Risk Diversification: International business by companies within a U.S. state result in a more diversified economic base for that state. By promoting international trade, states spread risks across multiple markets and reduce vulnerability to domestic economic downturns.

Innovation and Technological Advancement: International business awakens U.S. companies to international competition. This exposure drives these exporters to improve their products, services, and processes to remain competitive in the global marketplace. The adoption of new technologies can enhance productivity and efficiency, further contributing to the state’s economic growth.

Image and Reputation Building: A strong export sector enhances the international image and reputation of a state. This positive perception can attract foreign investors, tourists, and business partners, generating further economic benefits.

Spillover Effects: Effective export promotion programs have spillover effects that benefit the overall economy. When businesses engage in export activities, they often require inputs from other domestic industries, leading to increased demand and growth in related sectors.

The contribution of international trade to the economies of U.S. states plays a substantial role in states with major ports, airports, and diverse industries. States may be categorized as:

Trade-Dependent States: Certain states are highly dependent on international trade due to their strategic geographical location, transportation infrastructure, or industrial base, such as California, Texas, New York, Florida, and Illinois.

Export-Oriented States: Many other states have a significant portion of their economies tied to exporting goods and services due to historical business linkages.

SRK Affiliate has assisted 7 U.S. state export agencies in serving their client companies entering the Indian market.  We applaud U.S. states that see and support the benefits of international trade.

Selling into international markets requires careful planning, market research, understanding of trade regulations, and adaptation to cultural differences. SRK Affiliate offers comprehensive market entry assistance to companies wishing to enter the world’s most populous market, India.  To date, we have assisted 7 U.S. state export programs with market entry services for their client companies. For further information, please contact Supriya Kanetkar: srk@srkibconsultants.in