Global MarketPlace International Trade & Investment in Missouri. Department of Economic Development

Transcription

1 Global MarketPlace International Trade & Investment in Missouri Department of Economic Development Missouri Economic Research and Information Center 2009

2 MISSOURI: A Global MarketPlace Missouri intersects with international trade on many levels. Whether it is in our diverse array of export products, foreign-owned businesses, or foreign direct investments, Missouri is tied to the global economy and impacted by international demand. Missouri exports goods to nearly 200 countries around the world. Canada is Missouri s largest trading partner, importing an average of $4.5 billion in goods from Missouri each year. The International Trade Administration estimates that over 4,000 companies export goods from Missouri. Eighty-four percent are classified as small and medium-sized, with fewer than 500 employees. Among Missouri s industries, transportation equipment and chemicals are the state s top exports. Minerals and ores and agricultural products have been the fastest growing export industries in the last five years. Billions of foreign dollars have been invested in Missouri, contributing to economic growth through increased sales and quality job opportunities with higher than average wages. A highly trained workforce, central location, developed transportation infrastructure, and competitive wages make Missouri an attractive place for international trade. With over $12.8 billion in exports in 2008 and a growth rate of 12.7 percent over the past five years, Missouri is truly making its mark in the Global Marketplace. 1

3 International Trade: Missouri Goods Go Global Measuring Missouri s position in the global economy requires consideration of many factors, including the amount of goods Missouri companies are selling around the world, how those sales affect companies at home, and the degree to which investors from outside the U.S. are interested in doing business in Missouri. International sales by Missouri companies totaled $12.8 billion in 2008, a decrease of 4.8 percent, or $649 million, from Nationally, exports for all states increased by 11.8 percent in Missouri was one of four states with a decline in exports over the year. Half of the 32 export industries in Missouri declined from 2007 to However, the decrease in transportation equipment exports had the greatest impact on total Missouri exports by far, declining by 25 percent in 2008 from the previous year, a decrease of $1.2 billion. This decrease was larger than the 16 industries that increased combined. Over the last five years, Missouri s average annual growth rate has been 12.7 percent, just above the average for all states of 12.4 percent. Missouri s total exports slowed in 2007 and 2008, following rapid growth in 2004 through Top Missouri Exports Transportation Equipment 33.6% Chemicals 17.3% Machinery, Except Electrical 9.2% Food and Kindred Products 5.7% Electrical Equipment, Appliances, and Components 4.9% Computer and Electronic Products 4.5% Agricultural Products 3.6% Fabricated Metal Products, Nesoi 3.1% Minerals and Ores 2.4% Primary Metal Manufacturing 2.3% All Other 13.2% On average in the last five years, transportation equipment has been Missouri s top export industry, making up one-third of the state s total. Missouri s top ten export industries combined have accounted for 86.8 percent of the state s total exports. 2

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6 In comparing all countries receiving Missouri exports, Canada is by far the largest. Export shipments to Canada in the last five years have totaled more than $22 billion, an average of $4.5 billion annually. Within the top ten countries, average exports to Canada have made up nearly as much as the exports of the next nine countries combined. Missouri exports to Canada have increased by an average annual rate of 7.8 percent in the past five years. Mexico receives the second largest amount of Missouri exports, followed by South Korea, China, and Japan. Missouri s top ten export countries receive nearly 80 percent of the state s total exports. Exports to Korea had the most rapid average growth from Exports to the country increased by an average annual rate of 117 percent, despite declining exports in 2007 and Other top ten export countries with above average growth rates are China (31 percent), Netherlands (25 percent), and Belgium (17 percent). Exports to Canada and the United Kingdom had the slowest growth rates of Missouri s top ten export countries. The average annual growth rate for all countries was 12.7 percent from 2004 to

7 Foreign Direct Investment Foreign Direct Investment (FDI) into the United States has resulted in over $172 billion in capital expenditures (CAPEX) and created over 219,000 jobs over the past 6 years. The leading countries investing in the United States are the United Kingdom, Germany and Japan. Of all countries, Spain has shown the largest increase in outward investment to the U.S. The leading industry among investments is manufacturing which makes up 32 percent of all projects. Business Activities and Logistics, Distribution, and Transportation projects recorded the highest rate of growth since FDI in the United States Projects CAPEX Jobs $60.95 Bn 32, $36.52 Bn 56, $27.28 Bn 42, $21.61 Bn 28, $14.44 Bn 24, $11.97 Bn 34,434 Total 4,318 $ Bn 219,061 Midwest FDI The Midwest has received 488 foreign direct investment projects since From these foreign assets more than 71,000 jobs were created and over $34 billion in capital expenditures were received in the last 6 years. A total of 328 projects were identified from the major trading partners and emerging markets selected in this report. Canada made the largest capital expenditures into the Midwest and created over 13,000 jobs. Japan s investment is a close second in CAPEX with more jobs created and projects recorded. The leading business activity was manufacturing. 6

8 FDI in Midwest by Selected Countries Projects CAPEX Jobs Brazil 3 35,830, Canada 51 10,464,900,000 13,111 China 8 256,300,000 1,058 Germany 67 4,337,600,000 13,053 India 9 285,500,000 1,014 Japan 116 5,018,420,000 14,433 Mexico 4 91,300, S. Korea 6 85,900, UK 64 4,453,800,000 6,195 Total ,029,550,000 50,195 Missouri FDI Missouri has obtained 25 foreign direct investments since 2003, resulting in the creation of 6,725 jobs. Manufacturing firms not only accounted for the highest number of projects, but also had the largest growth on average. These manufacturing firms made up 48 percent of all Missouri FDI projects. Switzerland and Germany were the leading countries investing in Missouri, each accounting for 24 percent of the total number of projects. Canada and the United Kingdom came in close to the leaders, at 16 percent each. These four countries together make up 80 percent of the total investments into Missouri since Missouri FDI Projects CAPEX Jobs ,800, ,500, ,113,000,000 2, ,000,000,000 2, ,100, Total 25 3,061,400,000 6,725 7

9 Canada Profile $4.3 Billion Exported in 2008 (34% of Total Exports) 7.8% 5-Yr. Annualized Export Growth 4 FDI Projects in 5 Yrs. Missouri firms sent $4.3 billion in goods to Canada in 2008, making that country by far the largest export market. Canada exports represent a third of all Missouri outbound trade. The vehicle and related parts manufacturing sectors traditionally account for half of all export activity. Missouri and Canada share a common interest in automobiles. Canada s number one export to Missouri is vehicle parts while Missouri ships completed cars and trucks back to its northern trade partner. This trade, while advantageous to both, is threatened in the near-term by weakening economies in both the U.S. and Canada. Canada s huge export market creates wealth for a broad range of Missouri firms. Transportation, warehousing, and logistics companies, although not seen in export numbers, also benefit from the state s central location between Canada and Mexico. Interstates and railroads converge in Missouri to link products across all three NAFTA partners, creating logistics opportunities for local firms. A Chemical Bond Chemical manufacturing is a very sizeable export industry to Canada. While chemicals cover a broad range of products, over half of this sector is comprised of three main commodities: Medicines Cleaning Agents Pesticides and Herbicides Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 32.9 Population growth 1.0% GDP (US $ Billion) Real GDP growth 2.7% GDP per Capita (US $ Billion) 43,321 Inflation 2.2% Exchange rate C$: US $ 1.07 FDI Inflows (as % of GDP) 3.1% Corporate Tax rate 21%

10 Exports to Canada Transportation equipment, non-electrical machinery, and chemicals have been the top Missouri exports to Canada for some time. Over the past five years, these three industries accounted for up to 75 percent of all exports. That number declined to 62 percent in 2008 due largely to a fall in automotive sales. Missouri is the number one state exporter to Canada in several commodities. Missouri leads the nation in the export of coal, penicillin-based antibiotics, refrigerator/freezer cabinets, and transformers (liquid dielectric). All four of these top exports had sales over $20 million in Although Missouri firms export over 250 commodities to Canada, several large non-transportation products stand out for growth in the past two years. Penicillin-based antibiotic manufacturing grew at an annualize rate of 56 percent, copper ore at 28 percent, and dog/cat food manufacturing at 24 percent. Commodities listed had a minimum of $20 million in exports to Canada in Export Growth Indexed to US Exports to Canada MO Total Exports MO Exports to Canada 2500 Missouri Top Exports Industries to Canada Millions Transportation Equipment Machinery, Except Electrical Chemicals

11 Mexico Profile $1.3 Billion Exported in 2008 (10% of Total Exports) 12.7% 5-Yr. Annualized Export Growth No FDI Projects in 5 Yrs. Mexico is the most populous Spanish-speaking country and its economy is among the 15 largest in the world. The United States is Mexico s largest trading partner for both imports and exports. More than 80 percent of Mexico s exports are to the U.S. In addition, nearly one-half of Mexico s imported goods are from the U.S. These strong ties to the U.S. economy make Mexico more susceptible to conditions in the U.S. and the country has been impacted by the recent U.S. economic downturn. Oil and gas are important to Mexico s economy. Mexico is the 8th largest crude exporter and the third largest supplier of oil to the U.S. Agriculture provides export opportunities for Mexico, particularly to the United States, but is limited by the nature of the land and small, widespread rural farms. Manufacturing attracts foreign investment in Mexico, a large portion of which is from the U.S. However, services, and tourism in particular, have attracted investment from U.S. companies in the last year. What s New Although Missouri s top exports to Mexico have stayed fairly consistent in the last several years, demand and opportunity have paved the way for several newer commodities. Some recent additions and fast-growing Missouri s exports include intake air filters, prefabricated buildings, LED indicator panels, and soybean oil. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) Population growth 1.2% GDP (US $ Billion) Real GDP growth 3.3% GDP per Capita (US $ Billion) 8,219 Inflation 4.2% Exchange rate Ps: US $10.9 FDI Inflows (as % of GDP) 2.9% Corporate Tax rate 28% Personal Income Tax 28% Value-added Tax 15%

12 Exports to Mexico Missouri exported $1.3 billion in goods to Mexico in 2008, a decrease of 2.0 percent from Overall Missouri exports to Mexico increased by 40.2 percent from 2004 to 2008, compared to the national increase over the period of percent. In the last five years, transportation equipment and agricultural products each made up approximately 20 percent of Missouri s exports to Mexico, while chemicals made up another 10 percent, combining for half of all the state s exports to Mexico. Corn and soybeans have been the leading commodity exports from Missouri to Mexico, with both totaling over $100 million each in Missouri exports the 5th largest amount of these two crops to Mexico compared to other states. Other top commodity-level exports to Mexico are motor vehicles used for the transportation of goods ($93M), soybean flour and meals ($45M), and beer ($34M). Of the top commodities Missouri exports to Mexico, soybean flours and meals has been the fastest growing, up by 146 percent in the last year. Motor vehicle related commodities generally declined in 2008, likely a reflection of current economic conditions in Missouri and the U.S. 160 Export Growth Indexed to US Exports to Mexico MO Total Exports MO Exports to Mexico Missouri Top Export Industries to Mexico Millions Agricultural Products Transportation Equipment Food And Kindred Products

13 South Korea Profile $1 Billion Exported in 2008 (8% of Total Exports) 116.9% 5-Yr. Annualized Export Growth One FDI Projects in 5 Yrs. South Korea is one of the consistently growing economies in Asia. The GDP per capita of South Korea is comparable to the lesser economies of the European Union. South Korea is a serviceoriented economy, accounting for more than half of the GDP, while manufacturing and agriculture make up the rest. South Korea boasts of a high participation of workforce, very low unemployment rate, low corporate taxes, moderate inflation, an export trade surplus, and fairly equal distribution of income. As a result, South Korea is an attractive market for US export goods. The United States is a major trading partner accounting for 12.3 percent of exports to South Korea. U.S. exports to South Korea grew by 10.7 percent in the last three years. South Korea imported transportation equipment, food, electrical equipment, chemicals, minerals and ores from Missouri. South Korea s Flight Connection to Missouri Airplane and aircraft parts are the biggest commodity exports to South Korea. Missouri s airplane and aircraft parts exports to South Korea in 2006 were $1.05 B. However, due to the recent slowdown in the economy, Missouri s airplane and aircraft parts exports declined to $795 M in Missouri leads the nation in airplane and light aircraft exports to South Korea. Airplanes and light aircraft equipment comprises of nearly 80 percent of Missouri s commodity exports to South Korea. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 48.5 Population growth 0.6% GDP (US $ Billion) Real GDP growth 4.4% GDP per Capita (US $ Billion) 19,996 Inflation 2.9% Exchange rate W: US $ 930 FDI Inflows (as % of GDP) 0.8% Corporate Tax rate 13-25% Personal Income Tax 8-35% Value-added Tax 10%

14 Exports to South Korea South Korea ranks third among countries importing Missouri goods. Missouri s exports to South Korea increased at an annual average rate of percent over the past five years. In 2008, Missouri s exports to South Korea constituted 8 percent of the all exports. Transportation equipment, chemicals, food and kindred products, waste and scrap, and fabricated metal products are the top five Missouri industry exports to South Korea. Over the past two years, transportation equipment accounted for more than 80 percent of Missouri s exports to South Korea. The top five Missouri commodities exported to South Korea include airplane and other aircraft equipment ($724.7M), airplane and helicopter parts ($70.1M), zinc ore ($17.8M), and organo-sulfur compounds ($14.7M). Nationally Missouri ranks first in organo-sulfur compounds, second in zinc ore, fourth in airplane parts, eighth in fabricated metal products, and thirteenth in waste and scrap metal exports to South Korea. Transportation equipment, food and kindred products, and chemicals are the fastest growing exports to South Korea. While chemical exports increased by 37 percent and food exports quadrupled, transportation equipment exports to South Korea increased 33 times over the last four years E xport Growth Indexed to US Exports to South Korea MO Total Exports MO Exports to South Korea Missouri Top Export Industries to South Korea Millions Transportation Equipment Chemicals Food And Kindred Products

15 China Profile $944 Million Exported in 2008 (7% of Total Exports) 31.2% 5-Yr. Annualized Export Growth No FDI Projects in 5 Yrs. Missouri firms sent $944 million in goods to China in 2008, making that country the fourth largest export market. China exports represent 7 percent of all Missouri outbound trade. The waste and scrap industry sectors accounted for over one-third of all export activity last year. China changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Missouri has been able to capitalize on this more open system, growing its exports to China by over 31 percent in the past five years. China s growing export market has most recently benefited Missouri s waste and scrap industry, as commodities in copper, alloy steel, and aluminum waste and scrap have had the highest sales growth from 2007 to China Air Hub The potential to increase the Missouri-China trading partnership has led to the exploration of an Air Cargo Hub in St. Louis. From 1992 to 2006, the number of U.S. firms exporting to China jumped more than six times from 4,092 to 25,873. This helped lead to a feasibility study signed in March 2008 between Chinese and Missouri officials about developing an air freight hub at Lambert Airport in St. Louis. While surrounding states may also view an Air Cargo Hub in St. Louis as a benefit for their high-value export merchandise, Missouri has seen the most rapid growth of its surrounding states with a 31 percent annual growth rate in exports to China since The Air Cargo Hub forms the ideal conduit between Missouri s export growth and China s increasing import needs. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 1,321.3 Population growth 0.6% GDP (US $ Billion) 3,460 Real GDP growth 10.8% GDP per Capita (US $ Billion) 2,620 Inflation 2.6% Exchange rate RMB: US $ 7.61 FDI Inflows (as % of GDP) 3.0% Corporate Tax rate 25%

16 Exports to China Waste and scrap, chemicals, and non-electrical machinery have been consistent top Missouri exports to China for some time. Over the past five years, these three industries accounted for 47 percent of all exports to China. That number increased to 58 percent in 2008 due largely to a 258 percent spike in copper waste and scrap export prices. Among commodities from all states to China, Missouri ranked second in alloy steel waste and scrap, fourth in copper waste and scrap, sixth in soybean, and tenth in aluminum waste and scrap. All four of these top exports had sales over $45 million in Although Missouri firms export over 250 commodities to China, several non-waste and scrap products stand out for growth in the past two years. Veterinary medicine doubled at an annualize rate from , air/ gas pumps and compressors grew at 77 percent, and non-electrical articles of graphite or carbon at 62 percent. Commodities listed had a minimum of $4 million in exports to China in US Exports to China MO Total Exports MO Exports to China Missouri Top Export Industries to China Millions Waste And Scrap Chemicals Machinery, Except Electrical

17 Japan Profile $695 Million Exported in 2008 (5% of Total Exports) 10.8% 5-Yr. Annualized Export Growth No FDI Projects in 5 Yrs. Missouri firms sent $695 million in goods to Japan in 2008, making that country the fifth largest export market. Japan exports represent 5 percent of all Missouri outbound trade. The agricultural products and food and kindred industry sectors together accounted for nearly 60 percent of all export activity last year. It is clear that the targeted Agribusiness industry is a key player in this export market. While Japan s industrial sector is heavily dependent on imported raw materials and fuels, its tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Despite this, Missouri has been able to create its own niche in the ever expanding Japanese markets for agricultural products and food and kindred products. Commodities such as corn ($101M), fresh or chilled swine ($39M), frozen swine ($29M), and soybeans ($21M) have had the highest sales growth from 2007 to Japan s Trade Options are Missouri Export Strengths In the mid-80 s the Japanese market was often characterized as being excessively regulated and difficult to penetrate. An easing of these regulations has opened the Japanese market in many sectors where U.S. companies are globally competitive and where Missouri businesses have export strengths. The highest growth sectors in terms of imports from the U.S. to Japan include items like foodstuffs, raw materials, chemical products, and transport equipment. Likewise, four of the top five Missouri exports to all countries in 2008 were in these exact industries-transportation equipment, chemicals, food and kindred products, and agricultural products. The growing Japanese import sectors and Missouri s export strengths in these sectors presents an ideal partnership between the two in their present and future global economies. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) Population growth 0.0% GDP (US $ Billion) 4381 Real GDP growth 2.1% GDP per Capita (US $ Billion) 34,380 Inflation 0.0% Exchange rate : US $ FDI Inflows (as % of GDP) 0.1% Corporate Tax rate 40.9% Personal Income Tax 50%

18 Exports to Japan Agricultural products, food and kindred products, and chemicals have been consistent top Missouri exports to Japan for some time. Over the past five years, these three industries accounted for 58 percent of all exports to Japan. The most significant reversals of fortune over this five-year period have been agricultural products and computer and electronic products. Agricultural exports have grown from $2.4 million in 2004 to $214 million by Over this same period, computer and electronic exports to Japan have dropped from a high of $61.7 million down to $16.9 million. Among commodities from all states to Japan, Missouri ranked 5th in both agricultural products and food and kindred products. Each of these top exports had sales over $195 million. Although Missouri firms export over 250 commodities to Japan, several non-agricultural and food and kindred products stand out for growth in the past two years. Articles imported for repair or alteration grew at an annualize rate of 42 percent, reinforced pipe at 27 percent, and rubber or plastic adhesives at 21 percent. Commodities listed had a minimum of $1 million in exports to Japan in Export Growth Indexed to US Exports to Japan MO Total Exports MO Exports to Japan Missouri Top Export Industries to Japan Millions Agricultural Products Food And Kindred Products Chemicals

19 United Kingdom Profile $366M Exported in 2008 (3% of Total Exports) 6.5% 5-Yr. Annualized Export Growth 3 FDI Projects in 5 Yrs. The United Kingdom is an important trading partner, representing 3 percent of Missouri s total exports and ranking 7th among countries purchasing goods from the state in Printing and publication industries export over 20 percent of their products to the UK. Miscellaneous manufacturers, electrical equipment producers, and plastics/rubber manufacturers rely on the UK for 5 to 7 percent of their export business. The UK-Missouri trading partnership is aligned well with the state s targeted industries of defense, technology, and life science. Over the past four years, the UK has invested over $13 million and created over 70 jobs directly in the state with projects involving aircraft and defense, real estate, and information industries. UK-MO Composite Connection Supporting the UK s cutting-edge aerospace industry are some of the world s most technologically sophisticated composites manufacturers. The UK is a world leader in both high-quality composite manufacturing and research. Integral to this technology is Missouri s supply of graphite carbon fiber composite materials. Over 25 percent of the U.S. exports of carbon fiber composite material to the UK originate in Missouri. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 61 Population growth 0.6% GDP (US $ Billion) Real GDP growth 2.7% GDP per Capita (US $ Billion) 45,975 Inflation 1.9% Exchange rate : US $ 0.5 FDI Inflows (as % of GDP) 5.5% Corporate Tax rate 28% Personal Income Tax 20-40% Value-added Tax 18%

20 Exports to United Kingdom The top five Missouri industry exports to the United Kingdom included chemicals, transportation equipment, machinery, printing, and electrical equipment. Chemicals represented one fifth of the total Missouri exports to the UK. Missouri ranked 4th in total U.S. printing products exported to the UK. The top five Missouri commodities exported to the United Kingdom in 2008 include printed books and brochures ($40M), aircraft undercarriage parts ($25M), other aircraft parts ($21M), medications ($18M), and non-electrical graphite/carbon products ($12.8M). Missouri ranks second in two U.S. commodity exports to the UK, representing 25 percent of the UK s graphite/carbon purchases from the U.S. and 16 percent of the aircraft undercarriage part purchases. Missouri also ranks 10th among states exporting medication to the United Kingdom. High growth commodities include printed books and brochures, aircraft parts, medications, air combat simulators, and casks. New 2008 Missouri exports to the UK included jib cranes ($1.2M), military rocket launchers/flamethrowers ($701K), apparatuses for manufacturing semiconductor devices ($340K), lead waste ($297K), peanuts ($207K), and seamless pipes ($205K). 175 Export Growth Indexed to US Exports to UK MO Total Exports MO Exports to UK Missouri Top Export Industies to United Kingdom 80 Millions Chemicals Transportation Equipment Machinery, Except Electrical

21 Germany Profile $386 Million Exported in 2008 (3% of Total Exports) 42% 5-Yr. Annualized Export Growth 6 FDI Projects in 5 Yrs. The German economy is the fifth largest economy in the world in purchasing power parity and Europe s largest market. Germany is an important customer to Missouri companies representing 3 percent of the state s total exports. In 2008 Germany ranked 6th among countries purchasing goods from Missouri. Chemical industries in the state rely on Germany for more than 9 percent of their export business. Machinery, computer, and electrical equipment producers also rely on Germany for 3 percent or more of their exports. The Germany-Missouri trading partnership is aligned well with the state s targeted industries of defense, technology, automotive, finance, and life science. Over the past four years, German firms have invested over $1 billion directly in the state. Percent Cost Advantage/Disadvantage relative to the United States 20.5 Business Cost Advantages A 2008 KPMG study examined 27 locationsensitive business cost components in ten countries. Cost factors included labor, transportation, facility, utility, depreciation, financing, and taxes. These factors represented between percent of total operation expenses for firms in the study. Mexico 0.6 Canada U.S. U.K Japan Germany Although Mexico had the largest advantage due to low labor cost, the U.S. did fare well when compared to major trading partners with similar productivity levels. Germany had the highest cost structure, representing an opportunity to promote local investments closer to U. S. markets. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 82.6 Population growth 0.0% GDP (US $ Billion) 3,320.9 Real GDP growth 1.5% GDP per Capita (US $ Billion) 40,210 Inflation 1.4% Exchange rate : US $ 0.73 FDI Inflows (as % of GDP) 1.2% Corporate Tax rate 15% Personal Income Tax 45% Value-added Tax 19%

22 Exports to Germany The top five Missouri industry exports to Germany include chemicals, machinery, transportation equipment, electrical equipment, and computer/electronic products. Chemicals represented half of all Missouri exports to Germany. The top five Missouri commodities exported to Germany in 2008 include diagnostic/lab chemical reagents ($43M), non-electrical graphite/carbon products ($19M), drug related organic chemicals ($19M), prepared enzymes ($18M), and aircraft undercarriage parts ($18M). Missouri ranks first in two U.S. commodity exports to Germany, representing 43 percent of Germany s prepared enzyme purchases and 33 percent of the graphite/carbon product purchases from the U.S. The top five exports also represent the major growth commodities to Germany, with graphite/carbon products increasing from $226 million in 2005 to over $18 billion in Other high growth commodities include the chemical compound methionine ($3.8M), and reciprocating piston engines ($2.8M). New 2008 Missouri exports to Germany include powder makeup ($265K) and grinding machines ($221K). 130 Export Growth Indexed to US Exports to Germany MO Total Exports MO Exports to Germany 200 Missouri Top Export Industries to Germany Millions Chemicals Machinery, Except Electrical Transportation Equipment

23 Brazil Profile $256 Million Exported in 2008 (2% of Total Exports) 20.4% 5-Yr. Annualized Export Growth No FDI Projects in 5 Yrs. Brazil, the largest country in South America and the 5th most populous country in the world, has had rapid economic growth in recent years. The U.S. is Brazil s largest trading partner in South America. This relationship, combined with export growth of over 25 percent annually in the last three years, makes this country a priority emerging market. Although Missouri s firms currently export a relatively small amount of goods, Brazil does represent an opportunity for export growth, particularly in the agricultural input sectors. Agriculture, manufacturing, and services are major sectors of the Brazilian economy. Brazil is the world s largest producer of sugar cane, tropical fruits, and coffee and trails only the U.S. in the production of soybeans. With one of the most advanced industrial sectors in Latin America, Brazil s manufacturing spans a variety of sectors, including automobile production with several automakers planning to boost production and facilities in the country. Services make up more than two-thirds of the Brazilian economy and have been a major industry for U.S. investment in the last year. Barriers to Trade Although the U.S. is already a major trading partner with Brazil and Missouri-based companies Monsanto, Emerson Electric, and Leggett and Platt have locations there, barriers to trade still exist. Brazil is ranked 125 of 181 countries for the ease of doing business according to the World Bank. The cost and days to import goods to Brazil are higher than many comparative countries. The length of time to start a new business in Brazil (152 days) is also much longer than for competing countries, possibly deterring foreign investment. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) Population growth 1.1% GDP (US $ Billion) 1,313.7 Real GDP growth 3.6% GDP per Capita (US $ Billion) 6,938 Inflation 4.2% Exchange rate BRL: US $ 1.95 FDI Inflows (as % of GDP) 2.1% Corporate Tax rate 27.5%

24 Exports to Brazil Missouri exported $256.2 million in goods to Brazil in 2008, an increase of 15.3 percent from Overall Missouri exports to Brazil increased by 81 percent from 2004 to 2008, compared to the national increase over the period of percent. Despite rapid growth, Missouri exports made up less than 1 percent of all U.S. exports to Brazil in The leading Missouri exports to Brazil are chemicals, transportation equipment, machinery, and computer and electronics products. Nearly two-thirds of all Missouri exports to Brazil in 2008 were chemicals. Within the chemical industry, organic chemicals are the leading commodity from Missouri to Brazil. Missouri exports of organo-sulfur compounds to Brazil totaled over $88 million in 2008, more than any other state and making up 61 percent of the U.S. exports of that commodity. Other top commodity-level exports to Brazil are organo-inorganic compounds ($18.9M), phosphorus ($17.8M), and parts of motorcycles ($17.5M). Of the top commodities Missouri exports to Brazil, parts of motorcycles has been the fastest growing, up by over 200 percent in the last year. This commodity was a new export from Missouri to Brazil in Other high growth commodities include organo-inorganic chemicals, parts of locomotives, preparations for x-ray examinations, and polyamide plastics. 250 Export Growth Indexed to US Exports to Brazil MO Total Exports MO Exports to Brazil 200 Millions Chemicals Transportation Equipment Machinery, Except Electrical

25 India Profile $79 Million Exported in 2008 (0.6% of Total Exports) 36% 5-Yr. Annualized Export Growth No FDI Projects in 5 Yrs. India is the biggest democracy and the second fastest growing economy in the world. High economic growth and rising per capita income in recent years propelled India as the fourth-largest economy in terms of purchasing power parity. India s economy is comprised of three major sectors services, manufacturing and agriculture. Services are a major source for economic growth, employing more than a quarter of the labor force. India boasts a strong labor force, low corporate income taxes, and a growing middle-class making it an emerging market with high growth potential. India is one of the largest producers of food grains, steel, and cement besides being a global player in information technology, pharmaceuticals, tea, textiles, and jewelry. With a large englishspeaking population, India is a major destination for business process outsourcing of software programming and services. India imports 13 percent of its goods from the U.S., making the U.S. a major trade partner. U.S. exports to India grew by more than 35 percent in the last three years. Principal imports include capital goods, crude oil, minerals, chemicals, electronic products, and edible oils. Doing Business in India India represents a growing market for U.S. goods and services as worker incomes continue to climb. However, hurdles to market access do exist. Obtaining government licenses, enforcing contracts, and paying taxes can be problematic in India, especially if a company does not understand local business customs. Establishing a foothold in this and other emerging markets can be aided by employing the services of a local firm or contact to manage issues when a growth opportunity exists. Economic Data 2007 Historical Data Growth Rate (%) Population (Million) 1,130 Population growth 1.7% GDP (US $ Billion) 1,131 Real GDP growth 8.9% GDP per Capita (US $ Billion) 2,740 Inflation 4.9% Exchange rate INR: US $ 48.9 FDI Inflows (as % of GDP) 1.3% Corporate Tax rate 20% Personal Income Tax 30%

26 Exports to India Missouri exported $79.2 million in goods to India in Missouri s exports to India increased by an annual average rate of 36 percent over the past five years. Despite high growth, Missouri s exports to India constitute less than 1 percent of total exports in Chemicals, non-electrical machinery, non-metallic mineral products, scrap, and electronic products are the top five Missouri industry exports to India. Over the past five years, these industries represented three-fourths of the total exports to India. Chemicals account for nearly half of all exports. The top five Missouri commodities exported to India include pyridine chemical compounds ($10.7M), herbicides ($4.2M), organic and inorganic compounds ($4.0M), cyclic amide compounds ($3.7M) and printing machinery ($1.8M). Nationally Missouri ranks first in herbicides and cyclic amides, second in organic compounds as well as printing machinery, and eleventh in non-metallic mineral product exports to India. Chemicals, non-electrical machinery, and computer and electronic products are the fastest growing exports to India. Other industrial exports to India include textiles ($2.2M), waste and scrap ($2.1M), printing and published products ($2M), and plastic and rubber products ($1.7M). 300 Export Growth Indexed to US Exports to India MO Total Exports MO Exports to India Missouri Top Export Industries to India 40 Millions Chemicals Machinery, Except Electrical Computer And Electronic Products

27 Definitions Foreign Direct Investment (FDI) is a component of a country s national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially hot money which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly. Foreign Exports is defined as the value of all commodities produced by local industries and institutions that are shipped outside the U.S. Foreign Trade is the exchange of goods and services across international borders. Globalization is the generalized expansion of international economic activity which includes increased international trade, growth of international investment (foreign investment) and international migration, and increased creation of technology among countries. Globalization is the increasing world-wide integration of markets for goods, services, labor, and capital. minneapolisfed.org/econed/essay/topics/glossary05.cfm Sources CIA World Book Economist.com fdimarkets Crossborder Investment Monitor ( ) The World Bank U.S. Department of Commerce, Trade and Promotion Coordinating Committee National Export Strategy. U.S. Department of State World Institute for Strategic Economic Research (WISER) ( )

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