In this year's State of the Union Address, President Obama announced a National Export Initiative to double American exports over the next five years. He claimed that this could add two million jobs to the American economy. Could Tennessee actually double its exports over this period? And what would be the impact if it did?Tennessee, exports, trade, imports, exporting, global commerce, international

Steven G. Livingston

English

Research Papers in Economics

In this year’s State of the Union Address, President Obama 
announced a National Export Initiative to double Ameri-
can exports over the next five years. He claimed that this 
could add two million jobs to the American economy. 
The President appointed an Export Council, headed by the 
CEOs of Boeing and Xerox, to advise him on meeting this 
goal. Its first progress report was filed this summer. From 
a Tennessee perspective, could this state actually double 
its exports over this period? And what would be the impact 
if it did?
In 2009, Tennessee exported goods valued at $20.461 bil-
lion. If it could export $40.92 billion by 2015, what would 
be the effect on the state’s economy? The impact of trade 
is already significant. The International Trade Administra-
tion (ITA) estimates that exports generate 156,000 jobs 
in Tennessee. That’s the 13th highest figure among the 
American states. State economic data for 2009 is not yet 
available, but in 2008 the state’s exports equaled 9% of 
Tennessee’s gross state product. If we restrict the “econ-
omy” to croplands, mining, manufacturing, and wholesal-
ing—sectors from which the vast majority of exported 
goods come—that grows to over 30%.
Let’s do some back-of-the-envelope calculations. Predicting 
economic growth is difficult under any circumstances and 
probably impossible right now. But the state’s economy 
grew about 3% per year (in nominal terms) over the past 
decade. Using that figure, we estimate that the value of 
exports would equal 13.6% of the state’s economy if they 
doubled over the next five years. The ITA estimates that 
each $150,000 of merchandise exports supports one job. 
That estimate slowly rises over time due to productiv-
ity gains, among other reasons, so we’ll calculate using 
$160,000. At that figure, a doubling of state exports would 
produce an additional 128,000 jobs. If Tennessee’s overall 
rate of job growth matches the national projections made 
by the Department of Labor, these new export-related jobs 
would equal half the number of all jobs created in the state 
over this period. Now this is a bit exaggerated because 
there would have been some export growth even absent the
•  Business and Economic Research Center  •  Jennings A. Jones College of Business  •  Middle Tennessee State University  •
Tennessee and the International Economy
 Volume 16 Number 2 Fall 2010
GlobalCommerce
continued on page 2
EXPANDING EXPORTS I
CAN TENNESSEE DOUBLE ITS EXPORTS?
by Steven G. Livingston
▲
Year over Year Export Growth since 1995: 
Ranked from Highest to Lowest Growth
Export Growth Rates over 5 Years (since 1999)Obama initiative. If we subtract the jobs created by that 
growth (using historical export growth figures), we still 
get close to 60,000 new jobs in this state. Needless to say, 
that’s a significant figure. 
If it happens. What’s the chance the state can double its 
foreign shipments by 2015? Many experts are skeptical.  
Exports would have to grow about 15% a year over the 
next five years to meet this target. World trade has grown 
about 10% annually over recent years, so we would have 
to exceed that rate by 50%. Goldman Sachs has estimated 
that 30% depreciation in the dollar would be needed to 
accomplish this, a rather dramatic figure. So the practi-
cal question is whether the policy tools exist to accelerate 
exports that rapidly.
Tennessee’s historical experience seems to support a ver-
dict that doubling exports over five years will be difficult, 
though not impossible. In three out of the past 14 years, 
Tennessee exports indeed grew faster than 15%.  In two 
other years, the state was quite close. Is this half full (it can 
be done) or half empty (it hasn’t happened all that often)? 
Of course, it’s really more difficult than these figures sug-
gest because we would need five consecutive years of 15% 
increase. This has occurred but only in the distant past. 
Between 1972 and 1977, for example, state exports soared 
by more than 120%. But this was a period during which 
exports began at a rather low level, the dollar was falling, 
and the value of exports was inflated by the substantial 
price increases of the period. In more recent times, Tennes-
see’s best five-year export growth was between 2001 and 
2006. Bouncing off the bottom of the tech-bubble crash, 
and again aided by a weakening dollar, exports rose about 
90% over those five years—but not 100%. Optimists can 
note that nobody was trying to double exports over this 
period, and so a conscious effort could have put the state 
over the top. Pessimists would note that only a few five-
year periods over the past decade (a pretty good one for 
global growth) came close enough to think that marginal 
policy changes could have made the difference.
As is often the case, we can spot more hospitable terrain if 
we break exports out into regions and industries. Perhaps 
targeting the right regions, and the right industries, is the 
key to doubling exports? In a number of regions, Ten-
nessee has doubled foreign shipments over at least one 
five-year period in the past decade. In the case of China, 
doubling has almost been the rule. In six out of the eight 
most recent five-year stretches, Tennessee’s shipments to 
China have more than doubled. (The similar statistics for 
the BRIC—Brazil, Russia, India and China—are mostly 
due to China). The Middle East has the next best record. 
The geographical experience suggests that doubled exports 
are going to have to be built upon emerging markets, and 
especially China.
2
continued on page 6
Beating the Odds? Number of 5-Year Periods When 
Exports Doubled (since 2002)
Meeting the Mark? 5-Year Periods with Doubled 
Exports (since 2001)
Industries Doubling Exports over 5-Year Periods
Total = 257 *                                                  Number 
1996-2001 76
1997-2002 66
1998-2003 67 
1999-2004 89
2000-2005 87 
2001-2006 107 
2002-2007 138 
2003-2008    137
2004-2009    99
*4-digit HS code
DOUBLING EXPORTS
continued from page 2
▲Tennessee’s Largest Export Sectors 
THE U.K. CONTINUED 
AS THE ONLY TOP 
MARKET TO DECLINE 
LAST QUARTER.
FIVE NATIONS 
DOUBLED THE VALUE 
OF THEIR SHIPMENTS 
FROM LAST YEAR.
▲
▲
▲
Tennessee’s Leading Trade Partners
3
CARS AND 
CHEMICALS AGAIN 
SPEARHEADED A 
VERY STRONG 
QUARTER.
X
X
2nd Quarter 2010
2nd Quarter 2010 Fastest-Changing Export Destinations 
(Among countries averaging more than $3 million in sales per quarter)
2nd Quarter 2010
2nd Quarter 2009
     Change from   Change from 
  Exports  Last Year   Last Quarter
Transportation Equipment  $1,163,827,430  60.7%  -3.2%
Chemicals $1,024,206,877  32.7%  7.6%
Computer and Electronic Products  $888,841,306  28.8%  5.2% 
Miscellaneous Manufactured Goods  $745,560,455  2.1%  8.7% 
Nonelectrical Machinery  $613,439,903  73.3%  22.4%
Agricultural Goods  $209,230,867  45.9%  16.3%
Fabricated Metal Products  $203,696,954  40.2%  24.4%
  Value of Exports   Gain    Decline
COUNTRIES WITH THE GREATEST GROWTH
Ukraine $9,653,498  169.5%
Afghanistan $23,024,187  155.1%
Philippines $43,940,472  140.9%
Jamaica $16,377,052  138.5%
Sweden $31,751,160  101.4%
COUNTRIES WITH THE GREATEST DECLINE
Nigeria $3,109,781      -79.4% 
Bangladesh $1,392,974      -77.1%
Bolivia $3,509,442      -31.4%
Greece $7,520,080      -18.3%
United Kingdom  $183,647,488      -15.0% 4
Tennessee Monthly Exports
▲
A Tennessee Board of Regents university, MTSU is an equal opportunity, nonracially identifiable, educational institution that does not discriminate against individuals with disabilities. 
What’s Hot and What’s Not*
Global Commerce, published quarterly 
by the Business and Economic Research 
Center, Jennings A. Jones College of 
Business, Middle Tennessee State University, 
is available free of charge to interested 
individuals and institutions. 
Author: Steven G. Livingston
Editor/Designer: Sally Ham Govan
615-898-2610
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2nd Quarter 2010
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*Among Tennessee’s top 100 exported goods. Aircraft exports were recoded this year and so are not included.
  Value of Exports    Growth  Decline
SECTORS WITH THE GREATEST GROWTH   
Miscellaneous Special Purpose Vehicles  $20,669,905  2,587.3%
Uncoated Kraftliner  $13,775,858  924.9%
Compression-Ignition Piston Engines  $46,472,419 757.0%
Miscellaneous Engines and Motors  $32,108,015  584.2%
Raw Tobacco  $29,862,276  510.0% 
SECTORS WITH THE GREATEST DECLINE
Acetic Anhydride  $1,084,105    -91.6%
Printers/Copiers Connected to Computers  $4,349,156    -63.5%
Miscellaneous Printer and Copier Parts  $5,961,286    -52.7%
Calcium Hypochlorites  $6,189,808    -51.6%
Midweight Nonwoven Textiles  $6,351,493    -45.6%S
tate exports surged to $6.4 billion in the second quar-
ter, nearly a billion-dollar gain from a year ago. It was 
the best second quarter in the state’s history, as exports 
returned to the levels of before the great global crash of 
2008. Imports also soared. Tennessee firms purchased $11.5 
billion overseas, a two-billion dollar increase. In contrast to 
the doldrums of the domestic economy, Tennessee’s inter-
national trade was going gangbusters. 
The problem with reporting export figures for this quar-
ter is monotony. Everything grew, and by a lot. Among 
the state’s larger export sectors, the one slight exception 
to this was the state’s medical equipment industry, which 
grew only modestly. Its 3% gain was the smallest of any 
major Tennessee export sector. Other significant health care 
industries, such as orthopedics and pharmaceuticals, also 
performed more poorly than most for the quarter. Perhaps 
this is not so surprising, as these industries’ foreign sales 
were much less affected by the global downturn and so 
there was much less in the way of a rebound this year.
 
The state’s biggest increases were tallied by its two largest 
export industries. Tennessee’s chemical exports increased 
by a full third and crossed the billion-dollar mark in quar-
terly sales. Most of this huge gain was in the plastics sec-
tor (especially in cellulose derivatives and polyesters). But 
both organic (up 39%) and inorganic (25%) chemicals also 
did very well. The gains were truly global, with East Asia, 
Mexico, Brazil, Russia, Australia, and Singapore being 
among the strongest markets.
 
The auto industry did equally well. Car and SUV exports 
more than doubled (to $245 million), thanks to substantial 
new exports to the Middle East (especially Saudi Arabia) 
and Canada. Automotive engines did even better, with 
exports triple those of last year. Canada is the destination 
of almost all of them. Engine part exports doubled (to $109 
million). And diesel engines (not all of which go into cars 
or trucks) more than quadrupled, to $51 million. Oil and 
other automotive filters, with foreign shipments valued 
at $46 million, were among the many other auto-related 
exports that grew very strongly, in this case by 70 percent.
 
Though gains in laptop exports were more modest ($13 
million, an 8% gain), the computer industry was another 
sector that did very well. It added another $130 million 
in exports to last year’s number, a 57% gain. Canada and 
Latin America (particularly Colombia) accounted for most 
of this increase. At the other extreme from high-tech, cotton 
exports soared 40% to $185 million. Mexico and Turkey 
were the biggest factor behind this growth. Whiskey, as 
you might expect, also did quite well. Its 25% gain (to $125 
million) was mostly in Europe.   
 
As we said, it gets monotonous. Just about every kind of 
industrial machinery the state produces had a strong quarter. 
So did the telephony and aircraft industries, among others.
 
Though the growth was global, it was centered close to 
home. Canada, to which the state’s exports increased by 
37%, accounted for $475 million of Tennessee’s quarterly 
gain, just under one-third of the state’s export growth. 
Mexico’s 47% growth added another $250 million. The EU 
threw in $180 million more. China and Latin America each 
grew by $150 million. Japan’s 43% growth added $100 mil-
lion, the ASEAN nations another $80 million, and South 
Korea $60 million. Just about everybody chipped in! 
 
The few nations where Tennessee exporters did not have as 
much success reveal the continuing importance of a global 
economic recovery to the state’s export fortunes. Exports 
to Greece fell by a quarter in the wake of its financial cri-
sis. Shipments to Spain and the U.K., both under stringent 
budget-cutting regimes, were flat. So we are reminded, as if 
we needed it, that the export recovery, strong as it has been, 
remains fragile. Tennessee exporters are still living in inter-
esting times. ■
5
2nd Quarter 2010
EXPORTS RETURNED TO THE LEVELS OF BEFORE THE 
GREAT GLOBAL CRASH OF 2008.
TENNESSEE INTERNATIONAL TRADE REPORT
▲
Tennessee Monthly Imports Tennessee Trade-Weighted Dollar IndexThe best news for plans to double exports is that, in fact, 
most specific industries have accomplished this at least 
once over the past decade. Of the 257 state export industries 
(measured at the four-digit harmonized system code), only 
45 never doubled exports over any five-year period. Over 
some periods (2002-2007, 2003-2008) more than half of 
all state industries doubled their exports. With the single 
exception of the auto-parts industry, the state’s major export 
industries have all doubled their exports repeatedly. The 
trick is for them to do this at the same time! So far this has 
not happened. Such a common movement would be unlikely 
because these exports go to different markets. It is more 
realistic to expect doubled exports to be built upon several 
star sectors with tremendous growth. However, these figures 
also show that these industries would certainly have to be 
bolstered by solid growth across a large swath of Tennes-
see’s manufacturing economy.
Doubling exports is a very worthy goal. Its economic ben-
efits are obvious. For Tennessee, this goal is not beyond 
imagination; there is certainly evidence for making the case 
that it can be done. But history suggests that it will be dif-
ficult. Effective but underexploited mechanisms to boost 
exports are going to have to be found and supported. As yet, 
we don’t have much of a feel for what the Obama adminis-
tration is actually going to do, but it’s going to have to be 
more than exhortation. That said, this is a case where the 
effort itself is going to be worth it, even if the goal isn’t met. 
Any additional increase in exports is going to significantly 
help Tennessee workers and this state’s economy. It’s not a 
case of double or nothing. ■
6
DOUBLING EXPORTS
continued from page 2
Increasing exports will rely on increasing exporters. A few 
large firms dominate the American export picture. The top 
500 exporting firms account for 60% of the value of the 
nation’s exports. Over two-thirds of America’s exports come 
from firms that employ 500 or more people. But any serious 
effort to raise the level of exporting has to expand the num-
ber of firms that export.
 
Recent data shows that just under 7,000 Tennessee firms 
export. That number increased substantially over the past 
decade, and the state has half again as many exporters as it 
did in the late 1990s. This rate of increase well exceeded 
that of the nation. In this respect, Tennessee appears to 
be doing a good job in preparing the groundwork for sus-
tained export growth. One lingering question of the crash of 
2008, though, is how exporters or would-be exporters were 
affected by the economic downturn. The explosion of the 
tech bubble and ensuing recession of 2000-2001 led to a 
substantial drop in the number of firms that exported. Nearly 
1,000 Tennessee firms left the export market, and the num-
ber of state exporters didn’t return to the pre-recession level 
of 2000 until 2007. Will (or did) our current difficulties 
similarly drive exporters out of world markets? We don’t yet 
have the data to know, but this is an important question in 
assessing the state’s export capacity going forward.
One interesting sidelight in the pattern of Tennessee export-
ing is that the state’s exporting establishments have made 
some progress in closing one significant performance gap. In 
2000, the average Tennessee exporter shipped only 64% of 
the value of the average American exporter. In other words, 
state export operations were typically much smaller than 
their national counterparts. In 2008, this gap had shrunk, 
with state firms now at 80% of the national average. The 
average state firm is now shipping exports valued at about 
$3.16 million per year (a 63% increase from 10 years ago). 
Further closure of this gap will be another way for the state 
to increase its exports. ■
▲
Average Value of Exports per Firm (in $ millions)
Increase in Tennessee Exporters over the Past Decade
EXPANDING EXPORTS II
NUMBER OF TENNESSEE EXPORTERS
▲

Expanding Exports: Can Tennessee Double Its Exports?

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Expanding Exports: Can Tennessee Double Its Exports?

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