By a number of measurements, Nashville has the characteristics of an international center. During a recent survey of more than 100 key Nashville businesses already engaged in international work, 68% said they plan to expand or change activity, and 53% plan to expand or change their primary overseas markets. These findings are highlighted in a new directory for the International Business Council.
A recent article in The Economist, “Export or Die” (March 31, 2010), stressed that American businesses may have unique opportunities to grow sales and markets by expanding their international activity. Already the U.S. trade deficit is the lowest since 1998, as exporting is performing well. While export growth is led strongly by those firms already exporting, past evidence shows that new entrants and new products also create a large share of the nation’s expanding base of export activity. The Economist report goes on to note that “America’s export boom is likely to be led by firms that are already global in scale and by sectors in which America has a clear competitive advantage: sophisticated, knowledge-intensive capital goods (including high-end services).” Nashville’s diverse array of industries certainly figures into a variety of these descriptions.
While sometimes “smaller companies are deterred by the investment in market research, distribution and product design needed to sell abroad,” according to The Economist, there are ways to overcome this. The Chamber’s international business survey also reinforced that local businesses operating internationally are seeking assistance with items such as research, networks and connections. The Chamber is making a concerted effort to focus on these three areas in the future.
Since trade is always a two-way endeavor, an equitable, mutual benefit is the desired outcome. Economist Michael Porter said as much in defining the matter of comparative advantage. Even so, seeing the full balance requires considering all the ways that cities and nations benefit from the two-way exchanges. The nation has been a robust importer in recent years. While some studies point to lost jobs in the U.S. due to added imports, there is the very real role of foreign businesses establishing U.S. operations – foreign direct investment. The Wall Street Journal ( “U.S. Cities Seek to Woo Chinese Investment” April 6, 2010) reported an important emerging trend of Chinese investment in American locations, citing Chinese interests in easing restrictions on such investing along with desire to nurture new markets, technologies and product lines abroad. This is notable in the Nashville context as well, since more than half the large businesses who responded to our international survey are doing business with China, and it is by far the first choice of those firms expanding into new markets.
Nashville is not a newcomer to international business; its comparative advantages are considerable. Many of the strengths of Nashville as a domestic market hold true for international trade and investment as well – low costs, easy access, ready workforce and diverse economy. Clearly, the expansion of exporting and direct investment alike are significant opportunities for the Nashville region as economic recovery gains momentum.