A publication of the Indiana Business Research Center at IU's Kelley School of Business
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Outlook is Strong for Indiana Exports

Major economies in Asia are just now emerging from recession, but exports from Indiana businesses have increased for 11 straight years. In 1999, Indiana exports were up 4.2% over 1998.

"Expect Indiana export sales to grow even faster this year," said Dr. Lawrence Davidson, professor of business economics and public policy at Indiana University's Kelley School of Business and director of the university's Global Business Information Network.

Indiana's particular mix of export sales helped the state weather the recession in Asia. "Strong exports to Canada and Mexico allowed Indiana exports to grow in spite of the Asian crisis," said Davidson. More than half of all Indiana export sales are shipped to Canada. Exports from Indiana to Mexico have nearly tripled since 1995.

"Trade volume worldwide should rise in 2000, according to data from the Organization for Economic Cooperation and Development," said Davidson. "Both Canada and Mexico will show good economic growth this year."

The euro, the new common currency in much of Europe, is a potential problem. The value of the euro relative to the dollar has declined so far in 2000. This decline makes U.S. products more expensive in those countries. "The value of the euro is important to Indiana firms," said Davidson. "A variety of factors have contributed to its weakness, but the fact remains that a declining euro will slow down sales of Hoosier products in Europe."

Even though sales to European countries may be a challenge right now, other markets, especially in Latin America, are growing. "Through our network of foreign trade offices we can help companies explore their market potential in almost all areas of the globe and point out where opportunities may be coming from next," said Carlos Barbera, director of the International Trade Division of the Indiana Department of Commerce.  "One of the advantages of operating in the global marketplace is that business can take advantage of these economic ups and downs to explore new markets and balance out fluctuations in sales."

Resources:

  • The International Trade Division of the Indiana Department of Commerce provides technical assistance through the Indianapolis office and 12 international offices. Financial assistance to attend international trade shows is also available (http://www. state.in.us/doc/trade/index.html or call (317) 233-3762).
  • The Indiana Export Report prepared by Davidson and his staff is available at no cost from the Indiana Department of Commerce, International Trade Division at (317) 232-4949.

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Indiana Exports Hit New Record

Export sales from Indiana businesses reached $13.97 billion in 1999, the highest one-year total in the state's history. Propelled by nearly $4.1 billion in exports of transportation equipment, the increase in 1999 marked Indiana's 11th consecutive year of export increases. Figure 1 shows this steady expansion in exports, up from less than $5 billion in 1988.

Figure 1

Pull Quote

Data for 1999 were just released by the Indiana Department of Commerce (IDOC). The Global Business Information Network at the Kelley School of Business at Indiana University compiles the export information originally collected by the U.S. Bureau of Census, analyzes it, and places it into a historical perspective. The IDOC, in partnership with Cinergy, publishes this analysis, along with the data, in the quarterly Indiana Export Report.

The rate of increase in Indiana exports peaked in 1995. The change each year in Indiana's export sales is shown in Figure 2, along with the change in total U.S. exports. In the years 1993 through 1995, Indiana's exports grew nearly 20% per year. Indiana's rate of increase comfortably exceeded that of the nation. Since 1995, Indiana's export sales growth has averaged less than 5% per year. Export increases in recent years have been helped by the recovery of the Mexican peso, NAFTA and the strong consumer demand for motor vehicles.

Figure 2

Indiana is the 15th largest exporter in the nation. Regionally, it falls in the middle of the pack in terms of total exports, although the state may contribute more to the region's exports than the data show (see Figure 3). If much of Indiana's output is assembled in other states and then exported from there, that means some of Indiana's domestic shipments become the export sales of other states.

Figure 3

Transportation equipment is the largest export industry in Indiana (see Figure 4). Transportation equipment exports have grown an average of 29% per year since 1988. The other top export industries in 1999 were industrial machinery and computer equipment; chemicals; electronic equipment; and sophisticated instruments. Together these five industries accounted for 75% of all export sales from Indiana.

Figure 4

Among the major export sectors, Indiana's fabricated metals industry turned in the highest growth rate, averaging 44% per year since 1988. Exports from the sophisticated instruments industry expanded at a 32% annual rate, while rubber and plastics products exports climbed 24% per year.

Indiana firms ship to destinations all over the world, but more than half of all Indiana exports go to Canada. Six countries receive 77% of Indiana exports (see Table 1). Exports to Canada have quadrupled since 1988; exports to Mexico have shot up even faster. In 1999 Indiana's exports to Mexico were five times greater than they were in 1988.

Table 1