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Arizona's 2009 Exports Reflect Recessionary Environment
By Lora Mwaniki-Lyman and Ruth Christopherson
Introduction
Arizona's Export Participation in the Global Marketplace
Arizona's Top Export Destinations
What does Arizona Export to the Global Market?
Arizona's Exports to Mexico
Arizona's Exports to Canada
Arizona's Exports to China
Conclusion
Notes
Introduction
Arizona exports to the world dropped by 29 percent in 2009 from $19.7 billion in 2008 to $14 billion. This was more than the national decline in total global exports of 19 percent, placing Arizona 25th among all states in total exports for 2009 compared to 21st in 2008. (Graph 1)
Since the recession officially began in December 2007 exports have been one of Arizona's economic bright spots, but they saw a steep decline in 2009. The state was one of the hardest hit by the housing market crisis which led to the nation-wide recession. In 2009, Arizona ranked 2nd among all states in the rate of foreclosures and has lost over 300,000 nonfarm jobs since the recession began1. This is the first year, however, that state exports have reflected the economic downturn and the first absolute decline in export value since the last recession in 2001. The decline can be attributed to the lagging and slow turnaround in the global economy, especially in Europe, that has eroded global demand for U.S. and Arizona goods.
| Graph 1: Arizona's Exports to the Global Market (1998 - 2009) |
 |
| Source: WISERTrade |
Arizona's Export Participation in the Global Marketplace
Arizona's dependence on exports has continued to fall considerably since the 1997 Asian crisis, when exports accounted for 10.9 percent of state Gross Domestic Product (GDP) and were above the nationwide average of 8.3 percent (Graph 2). In 2008 Arizona exports as a percentage of its GDP stood at 7.9% which was below the nationwide average of 9.0%. Between 1997 and 2004, Arizona's exports as a percentage of GDP were always above the national average. The trend inverted in 2004 and has remained since then.
Indeed, Arizona's economy has gone through structural adjustments in the last decade. The share of economic activities and production levels compared to the whole economy has declined in the goods-producing sectors but risen in the service-providing sectors. Gross Domestic Product (GDP) share of the goods-producing sector (mining, construction and manufacturing) declined from 22 percent in 1997 to 15 percent in 2008. Specifically, the GDP share of manufacturing sector contracted from 15.1 percent in 1997 to 7.8 percent in 2008.
| Graph 2: Arizona's Exports as a Share of GDP (1997 - 2009) |
 |
| Note: While the national Gross Domestic Product (GDP) for 2009 has been released by |
| the Bureau of Economic Analysis, GDP by state will not be released until November 18, 2010 |
| Source: U.S. Bureau of Economic Analysis and WISERTrade |
On the other hand, GDP share of the service sector (excluding government) increased from 75.3 percent in 1997 to 82.1 percent in 2008. The reasons for the decrease in manufacturing activities and increase in the service sector activities are debatable and range from NAFTA-effects, China-effects and globalization to population dynamics. A high population growth, second only to Nevada in the last 10 years and a higher share of younger and older population than the national average2, has provided economic opportunities in service-providing sectors such as retail, financial activities and health care and social services among others.
Arizona's Top Export Destinations
In 2009, Mexico was Arizona's top export destination accounting for 32.4 percent of total exports, or over $4.5 billion. Canada came second, accounting for 12.5 percent followed by China (Mainland3) with a 5.9 percent share (Graph 3).
|
The top three export destination countries accounted for more than 50 percent of Arizona's top exports in 2009.
United Kingdom, Germany, Japan, Singapore, France, Malaysia and Thailand rounded out the top ten export destinations (Table 1). Demand for Arizona goods declined in all ten of Arizona's export destinations in 2009.
Mexico has maintained its privileged position as Arizona's top export destination by export value over the last ten years while Canada has maintained its position as Arizona's second top export destination. China however has been a rising star, moving from 17th position in 2001, right after it joined the free market, to Arizona's 3rd highest export destination in 2009 (Graph 4).
China (Mainland) took third position from United Kingdom in 2006 and has remained the third largest export destination of Arizona's exports since.
Table 1: Arizona's Top Export Markets
Ranked by 2009 Dollar Value
|
| Rank | Country | 2009 Exports | Export Share | % Change 2008-2009 |
| 1 | Mexico | $ 4,544,350,786 | 32.4% | -23.1% |
| 2 | Canada | $ 1,748,327,061 | 12.5% | -23.2% |
| 3 | China (Mainland) | $ 822,051,978 | 5.9% | -34.5% |
| 4 | United Kingdom | $ 600,523,689 | 4.3% | -40.7% |
| 5 | Germany | $ 586,642,226 | 4.2% | -39.1% |
| 6 | Japan | $ 527,322,721 | 3.8% | -27.9% |
| 7 | Singapore | $ 524,512,354 | 3.7% | -48.0% |
| 8 | France | $ 493,697,952 | 3.5% | -18.8% |
| 9 | Malaysia | $ 340,047,550 | 2.4% | -11.1% |
| 10 | Thailand | $ 306,956,643 | 2.2% | -34.5% |
| Top 10 Markets | $ 10,494,432,960 | 74.8% | -28.2% | |
| Rest of the World | $ 3,529,183,128 | 25.2% | -31.2% | |
| Total Arizona Global Exports | $ 14,023,616,088 | |||
What does Arizona Export to the Global Market?
In 2009, computer and electronic products accounted for 31 percent of the dollar value of goods exported from Arizona (Graph 5). Products in this category include semi-conductors and other electronic components, navigational, measuring, electro-medical, and control instruments, computer equipment, audio and video equipment among others. Companies in Arizona specializing in these products include Motorola, Intel, Honeywell, IBM, Texas Instruments, and many other lesser-known firms.
The second largest export category in 2009 was transportation and equipment at 18 percent of all Arizona's exports by dollar value. Top exports in this category include motor vehicle parts, aerospace products and parts, motor vehicle electrical and electronic equipment and automobiles and light duty motor vehicles, including chassis to mention a few. Representative companies include Ford, Raytheon, Bombardier, Universal Avionics and Honeywell.
| Graph 5: Arizona's Top 5 Export Categories, 2009 |
 |
| Source: EBRC and TradeStats Express |
Machinery, except electrical was the third largest product category in 2009 at 10 percent of total exports and includes electrical machinery, communication and energy wires and cables, wiring devices, batteries, among others.
The industry that has experienced the largest growth in export value in the last 12 years was oil and gas (which is a very small industry) with a 7,547 percent increase since 1997 followed by minerals and ores with an 808 percent increase (Table 2).
While computer and electronic products is still Arizona's top export category, its share of global exports has dropped by more than half from 65 percent in 1997 to 31 percent in 2009 (Graph 6). The remaining top three export categories; transportation and machinery, except electrical, have grown in export share during the same period from 11 percent to 18 percent and 5 percent to 10 percent respectively.
Table 2: Top 10 Arizona Export Commodities to the World by Product
| Million U.S. Dollars | Percent Share | |||||||
| NAICS Code | Export Commodities by NAICS | 1997 | 2000 | 2009 | 1997 | 2000 | 2000 | Annual Avg. % Change 1997-2009 |
| 334 | Computer and Electronic Products | $ 9,020.3 | $ 6,883.6 | $ 4341.6 | 65% | 48% | 31% | -4.3% |
| 336 | Transportation Equipment | $ 1,561.0 | $ 2,257.9 | $ 2,511.1 | 11% | 16% | 18% | 5.1% |
| 333 | Machinery, except Electrical | $ 639.5 | $ 908.6 | $ 1,344.6 | 5% | 6% | 10% | 9.2% |
| 332 | Fabricated Metal Products, Nesoi | $ 336.6 | $ 748.2 | $ 953.8 | 2% | 5% | 7% | 15.3% |
| 335 | Electrical Equipment, Appliances, and Component | $ 366.9 | $ 673.5 | $ 752.6 | 3% | 5% | 5% | 8.8% |
| 111 | Agricultural products | $ 353.4 | $ 316.4 | $ 694.7 | 3% | 2% | 5% | 7.8% |
| 325 | Chemicals | $ 136.9 | $ 240.9 | $ 506.2 | 1% | 2% | 4% | 22.5% |
| 339 | Miscellaneous Manufactured Commodities | $ 299.3 | $ 325.4 | $ 426.9 | 2% | 2% | 3% | 3.6% |
| 326 | Plastics and Rubber Products | $ 196.2 | $ 555.7 | $ 409.9 | 1% | 4% | 3% | 9.1% |
| 212 | Minerals and Ores | $ 48.6 | $ 53.9 | $ 392.6 | 0% | 0% | 3% | 59.0% |
| All Other Categories | $ 861.6 | $ 1,370.3 | $ 1,699.5 | 6% | 10% | 12% | 8.1% | |
| Total all Industries | $ 13,820.2 | $ 14,333.7 | $ 14,023.6 | 100% | 100% | 100% | 0.1% | |
|
Arizona's Exports to Mexico
Arizona exported goods worth $4.5 billion dollars to Mexico in 2009, a decline from $5.9 billion or 23 percent in 2008 (Graph 7). Despite this, Arizona exports to Mexico have increased at a 9 percent average annual rate since 1997. Top 3 export commodities in 2009 were computers and electronic products ($1.1 billion), machinery, except electrical ($466 million), and electrical equipment ($430 million).
Computer and electronic products has seen their share rise from 21 percent in 1997 to 34 percent in 2000 and then drop to 24 percent in 2009. The percent share in exports for the machinery and electrical equipment industries have both declined since 1997, with machinery slipping from 13% in 1997 to 10% in 2009 and electrical equipment falling from 11% to 9% over the past 12 years (Table 3).
| Graph 7: Arizona Exports to Mexico, by Export Value, 1997 to 2009 |
 |
| Source: WISERTrade |
Table 3: Arizona's Export Commodities to Mexico, Top 10
| Million U.S. Dollars | Percent Share | |||||||
| NAICS Code | Export Commodities by NAICS | 1997 | 2000 | 2009 | 1997 | 2000 | 2000 | Annual Avg. % Change 1997-2009 |
| 334 | Computer and Electronic Products | $ 454.2 | $ 1,572.4 | $ 1,093.1 | 20.9% | 33.8% | 24.1% | 11.7% |
| 333 | Machinery, except Electrical | $ 289.2 | $ 354.5 | $ 466.0 | 13.3% | 7.6% | 10.3% | 5.1% |
| 335 | Electrical Equipment, Appliances, and Component | $ 237.5 | $ 502.8 | $ 430.0 | 10.9% | 10.8% | 9.5% | 6.8% |
| 326 | Plastics and Rubber Producrs | $ 150.4 | $ 511.0 | $ 327.3 | 6.9% | 11.0% | 7.2% | 9.8% |
| 331 | Primary metal Manufacturing | $ 112.5 | $ 226.8 | $ 280.5 | 5.2% | 4.9% | 6.2% | 12.4% |
| 332 | Fabricated Metal Products, Nesoi | $ 140.3 | $ 337.9 | $ 253.9 |
6.4% | 7.3% | 5.6% | 6.7% |
| 311 | Food and Kindred Products | $ 58.3 | $ 85.4 | $ 212.1 | 2.4% | 1.8% | 4.7% | 24.9% |
| 111 | Agricultural products | $ 45.3 | $ 96.9 | $ 205.5 | 2.1% | 2.1% | 4.5% | 29.4% |
| 325 | Chemicals | $ 44.9 | $ 95.5 | $ 195.6 | 2.1% | 2.1% | 4.3% | 27.9% |
| 322 | Paper | $ 100.3 | $ 201.2 | $ 177.8 | 4.6% | 4.3% | 3.9% | 6.4% |
| All Other Categories | $ 550.0 | $ 667.2 | $ 902.4 | 25.3% | 14.3% | 19.9% | 5.3% | |
| Total all Industries | $ 2177.9 | $ 4651.7 | $ 4544.4 | 100% | 100% | 100% | 9.1% | |
Arizona's Exports to Canada
| Graph 8: Arizona's Exports to Canada, by Export Value, 1997 to 2009 |
 |
| Source: WISERTrade |
Arizona's exports to Canada totaled $1.7 billion dollars in 2009. Exports to Canada have seen a decrease between 2008 and 2009 of more than half a billion dollars or 23.2 percent (Graph 8). In spite of this sharp decrease, Arizona exports to Canada have increased at a 5 percent average annual rate since 1997.
The top 3 export commodities in 2009 were computers and electronic products (26.8 percent share), transportation equipment (24.5 percent share), and agricultural products (15.5 percent share). Edible vegetables and certain roots and tubers (about $194.9 million) and edible fruit and nuts; Peel of citrus fruit or melons ($72.8 million) are some of the top agricultural products exported to Canada in 2009.
Table 4: Arizona's Export Commodities to Canada, Top 10
| Million U.S. Dollars | Percent Share | |||||||
| NAICS Code | Export Commodities by NAICS | 1997 | 2000 | 2009 | 1997 | 2000 | 2000 | Annual Avg. % Change 1997-2009 |
| 334 | Computer and Electronic Products | $ 488.5 | $ 724.8 | $ 467.7 | 44.6% | 48.6% | 26.8% | -0.4% |
| 336 | Transportation Equipment | $ 195.2 | $ 263.8 | $ 428.8 | 17.8% | 17.7% | 24.5% | 10.0% |
| 111 | Agricultural Products | $ 81.1 | $ 84.1 | $ 270.5 | 7.4% | 5.6% | 15.5% | 19.5% |
| 325 | Chemicals | $ 24.2 | $ 53.2 | $ 128.5 | 2.2% | 3.6% | 7.4% | 36% |
| 333 | Machinery, except Electrical | $ 55.5 | $ 80.7 | $ 119.8 | 5.1% | 5.4% | 6.8% | 9.7% |
| 332 | Fabricated Metal Products, Nesoi | $ 77.7 | $ 80.9 | $ 72.4 |
7.1% | 5.4% | 4.1% | -0.6% |
| 335 | Electrical Equipment, Appliances, and Component | $ 23.2 | $ 36.4 | $ 68.4 | 2.1% | 2.4% | 3.9% | 16.2% |
| 339 | Miscellaneous Manufactured Commodities | $ 21.3 | $ 30.9 | $ 60.9 | 1.9% | 2.1% | 3.5% | 15.5% |
| 990 | Special Classification Provisions, Nesoi | $ 20.8 | $ 27.2 | $ 18.1 | 1.9% | 1.8% | 1.0% | -1.1% |
| 331 | Primary Metal Manufacturing | $ 31.3 | $ 9.9 | $ 17.5 | 2.9% | 0.7% | 1.0% | -3.7% |
| All Other Categories | $ 77.5 | $ 98.9 | $ 95.7 | 7.1% | 6.6% | 5.5% | 2.0% | |
| Total all Industries | $ 1096.2 | $ 1490.8 | $ 1748.3 | 100% | 100% | 100% | 5.0% | |
Arizona's Exports to China
Arizona exports to China totaled to $822.1 million dollars in 2009, amounting to a decline of 34 percent in export value since 2008 but an annual average increase of 25.2 percent since 1997. The largest increase was seen between 2000 and 2008 when China joined the World Trade Organization and became an open market for U.S. goods. Exports from Arizona to China have grown at an annual average of 36.7 percent since 2000.
Commodities that are top exports to China include computer and electronic products (accounting for 50.7 percent of all 2009 exports to China), minerals and ores (13.3 percent share) and machinery, except electrical (8.4 percent share).
Table 5: Arizona's Export Commodities to China, Top 10
| Million U.S. Dollars | Percent Share | |||||||
| NAICS Code | Export Commodities by NAICS | 1997 | 2000 | 2009 | 1997 | 2000 | 2000 | Annual Avg. % Change 1997-2009 |
| 334 | Computer and Electronic Products | $ 79.3 | $ 57.7 | $ 416.7 | 38.8% | 37.9% | 50.7% | 35.4% |
| 212 | Minerals And Ores | $ - | $ 0.2 | $ 109.1 | 0.0% | 0.1% | 13.3% | N/A |
| 333 | Machinery, except Electrical | $ 7.0 | $ 9.5 | $ 68.7 | 3.4% | 6.3% | 8.4% | 73.0% |
| 111 | Agricultural (crop) Products | $ 97.9 | $ 4.6 | $ 59.9 | 47.9% | 3.0% | 7.3% | -3.2% |
| 336 | Transportation Equipment | $ 10.0 | $ 21.2 | $ 44.5 | 4.9% | 13.9% | 5.4% | 28.6% |
| 326 | Plastics And Rubber Products | $ 0.7 | $ 1.8 | $ 24.7 |
0.4% | 1.2% | 3.0% | 277.2% |
| 335 | Electrical Equipment, Appliances, and Component | $ 1.3 | $ 10.3 | $ 22.5 | 0.7% | 6.8% | 2.7% | 132.2% |
| 910 | Wate And Scrap | $ 2.0 | $ 5.4 | $ 21.1 | 1.0% | 3.5% | 2.6% | 79.9% |
| 325 | Chemicals | $ 0.6 | $ 0.7 | $ 10.2 | 0.3% | 0.5% | 1.2% | 137.5% |
| 332 | Fabricated Metal Products, Nesoi | $ 3.3 | $ 5.9 | $ 9.5 | 1.6% | 3.9% | 1.2% | 15.5% |
| All Other Categories | $ 2.0 | $ 34.8 | $ 35.0 | 1.0% | 22.9% | 4.3% | 140.4% | |
| Total all Industries | $ 204.3 | $ 152.1 | $ 822.1 | 100% | 100% | 100% | 25.2% | |
China has proved to be Mexico's strong import competitor for computer and electronic products. The share of computer and electronic products exported to Mexico decreased from 34 percent in 2000 to 24 percent in 2009 while China's share grew from 37.9 percent in 2000 to 50.7 percent in 2009. Arizona exports of computer and electronic products to China more than doubled between 2005 and 2006, resulting in a 84 percent increase in Arizona's total export value to China in 2006 (Exhibit 9). This makes computer and electronic products the main component of Arizona's exports to China.
| Exhibit 9: Arizona's Exports to China, by Export Value, 1997 to 2009 |
 |
| Source: WISERTrade |
Arizona's export value of minerals and ores to China rose dramatically between 2008 and 2009 by 1,709.6 percent. Arizona, the largest producer of copper in the U.S. will continue to benefit from China's growing demand as the largest user of copper in the world.
Conclusion
Arizona's exports have been profoundly impacted by the U.S. recession and declining demand in Mexico. As the U.S. and global economy recovers, we expect to see a strong recovery in Arizona's global exports.
Notes:
1. Foreclosure data is from RealtyTrac Inc. and employment data is from the Arizona Department of Commerce.
2. Population data is from the U.S. Census Bureau.
3. Exports to 'Mainland' China refers to exports to continental China and exclude exports to Taiwan and Hong Kong.
