Indiana Exports on the RiseBLOOMINGTON, Ind. -- Despite the sluggish economy and volatile export trends in the past several years, Indiana exports totaled $32.2 billion in 2011, a record high for the state, according to a new report from Indiana University's Kelley School of Business.
The same report, produced by the Indiana Business Research Center, also cautions that stagnating European economies and the moderate activities in several emerging markets "do not bode well for robust increases in exports in 2012."
Tanya Hall, an economic research analyst at the IBRC and a co-author of the report, observed that Indiana has outperformed the nation in its exports' annual rate of growth over the past 10 years, 8.1 percent versus 7.1 percent.
The global slowdown since 2008 has affected U.S. and Indiana exports, particularly in 2009, Hall wrote in the report, "Global Positioning: Indiana's Exports in 2011."
"U.S. export activity contracted 18 percent in 2009 before rebounding in 2010. Indiana, on the other hand, began to feel the effects of the recession in 2008, but suffered less contraction in 2009," she said. "Indiana's 2010 rebound was stronger than the nation and the Midwest, marking the strongest year-over-year growth in a single year since 2000. In 2011, however, Indiana's increase in exports was not as strong as either the Midwest or the nation as a whole."
Exports in Indiana rose 25.5 percent from 2009 to 2010 and 10.3 percent from 2010 to 2011. The state's exports outpaced gross domestic product growth in almost every industry, except for machinery and computer and electronic products. Looking at Indiana's most popular export products, a familiar story remains. Vehicles and parts have persisted as the state's top exporting industry and experienced sustained growth of 16.7 percent in the past year.
The report noted that a shift took place in 2011 concerning destinations for Indiana exports. From 2001 to 2011, it looked as if Canada and Mexico -- two major markets for state goods that historically account for almost a half of all exports -- might be eclipsed by trade with Germany, Spain and two BRIC nations, Brazil and China.
However, in 2011, increases in exports to these countries dropped to single digits, including 1.7 percent in the case of Spain, which had been growing by triple digits since 2000.
In 2011, Indiana exports to Canada and Mexico jumped by 10.2 percent or by $1.1 billion and 25.5 percent or $665 million, respectively.
"The strengthening rebound in the national auto sector, together with the softening of the European economies and the moderating growth of Brazil, Russia, India and China explain this shift in export trends," the report said. "Given the strong economic headwinds currently experienced across the globe, the only bright spot on the export horizon is trade related to the auto sector with Indiana's largest trading partners, Canada and Mexico."
Exports to Latin American and Caribbean countries also were significant in 2011, accounting for 15.5 percent and totaling $5 billion of the state's overall trade activity. Excluding Mexico, the region imported 5.3 percent of the state's exports.
"While not close to Asia or Europe in significance currently, since 1997 Indiana has dramatically increased its exports to Latin American and Caribbean countries by a staggering 383 percent," the report said. "As with other global regions, the Great Recession resulted in a dip in exports during 2009, but exports strongly rebounded in 2010 and 2011."
Also in the report:
- Exports from industrial machinery (including computers), which provide many of the components needed by the vehicles and parts industry -- particularly the sector that produces engines -- also grew strongly, 18.5 percent.
- Vibrant growth in exports to several smaller destinations was reported, including a 92.7 percent increase in war-related imports from 2008 to 2011 by Afghanistan. Indiana exported to 202 countries in 2011, but only 30 nations had export sales totaling more than $100 million.
- Among Asian countries, imports from Indiana have increased at an average annual rate of 14.5 percent from 2009 to 2011, with Japan, Korea and China leading the way. Japan was the fourth largest importer of state goods last year, totaling $1.3 billion.
- Indiana and California are the leaders nationwide with 12 percent and 10.1 percent of U.S. pharmaceutical exports, respectively. The Hoosier state previously had been ranked third (in 2008).
The complete report is available on the IBRC website. Support for the report came from the IU Center for International Business and Education and the IU Center for Latin American and Caribbean Studies.
Source: Indiana University Kelley School of Business