North Carolina in the Global Economy. North Carolina in the World Economy I: Job Losses From Imports 1994--2002: 87,000 Manufacturing Jobs Disappeared.

North Carolina in the Global Economy

North Carolina in the World Economy I: Job Losses From Imports

• 1994--2002: 87,000 Manufacturing Jobs Disappeared in North Carolina.

• Sectors Most Heavily Hit: Low-Skill Manufacturing Industries (Apparel, Basic Assembly Operations in Furniture Industry).

• Textiles? About 23,000 Job Losses in North and South Carolina in 2001.

North Carolina in the World Economy II: Job Creation and Exports

• Exports from North Carolina to the World:– Increased by 87.7% Between 1993 and 2000– The 18th Largest increase Among All States

• Export-Related Jobs in North Carolina:– 132,900 Manufacturing Jobs Depend Upon Exports (17.2%

of All Manufacturing Jobs)– 285,600 Manufacturing Jobs in All Sectors Depend Upon

Exports– Another 152,700 Jobs Indirectly Supported by Exports (e.g.,

transportation, business services, wholesale and retail trade, other non-manufacturing activities)

– Total: 438,300 Jobs Supported by Exports.

Source: Job data from U.S. International Trade Administration. 2001. U.S. Jobs From Exports: A 1997 Benchmark Study of Employment Generated by Exports of Manufactured Goods. Export Growth from http://www.ita.doc.gov/.

North Carolina Export Markets, 2001

APEC41%

NAFTA28%

FORMER SOVIET REPUBLICS

1%

MIDDLE EAST1%

EUROPEAN UNION13%

ASEAN2%

CENTRAL AMERICA6%EAST EUROPE

1%

CARIBBEAN2%

OPEC1%

SOUTH AMERICA3%

SUBSAHARAN AFRICA1%

Source: International Trade Administration

Growth of Exports to North Carolina's Largest Foreign Markets, 1997-2001

-10

0

10

20

30

40

50

60

70

80

WORLD APEC CENTRAL AMERICA EUROPEAN UNION NAFTA

Pe

rce

nt

Ch

an

ge

Source: International Trade Administration

North Carolina Manufacturing Exports in 2001, By Sector

Apparel Manufactures13%

Chemical19%

Plastic/Rubber4%

Machinery11%

Computer/Electronics22%

Fabricated Metal3%

Leather0%

Misc3%

Furniture1%Transportation

6%

Appliances/Parts4%

Primary Metal3%

Wood Products1%

Processed Foods2%

Non-Apparel Textiles1%

Fabric Mill Products7%

Source: International Trade Administration

North Carolina Export Growth 1997-2001, By Sector

-40

-20

0

20

40

60

80

100

Fa

bri

c M

ill

Pro

du

cts

Pro

ce

ss

ed

Fo

od

s

No

n-A

pp

are

l T

ex

tile

s

Ap

pa

rel

Ma

nu

fac

ture

s

Le

ath

er

Wo

od

Pro

du

cts

Ch

em

ica

l

Pla

sti

c/R

ub

be

r

Pri

ma

ry M

eta

l

Fa

bri

ca

ted

Me

tal

Ma

ch

ine

ry

Co

mp

ute

r/E

lec

tro

nic

s

Ap

pli

an

ce

s/P

art

s

Tra

ns

po

rta

tio

n

Fu

rnit

ure

Mis

c

Pe

rce

nt

Ch

an

ge

Source: International Trade Administration

Export Jobs Pay Better Than Import-Competing Jobs

• On average, jobs in export sectors offer 13% to 20% higher wages than jobs in import-competing sectors.

Not Job Destruction

• The Story of Trade is Not One of Job Destruction– Some Jobs are Destroyed– Other Jobs are Created

• Story of Trade is One of Changes in the Kinds of Jobs Available in the Local Economy

• In the United States (and North Carolina), this Change is:– The Elimination of Low-Skill (and Low Wage) Jobs– The Creation of High-Skill (and High Wage) Jobs

Jobs by Sector in District 8, 1993

Construction7%

Furniture and Fixtures1%

Apparel6%

Textile Mill Products19%

Wholesale Trade3%

Food and Kindred Products2%

Lumber and Wood Products2%

Fabricated Metal Products1%

Retail Trade17%

Transportation Equipment1%

Transportation, Communication, and Utilities

3%

Finance, Insurance, and Real Estate

2%Rubber and Misc Plastics

1%

Industrial Machinery and Equipment

1%

Services13%

Government17%

Primary Metal Industries1%

Agriculture, Forestry, and Fishing

2%

Total Jobs: 157,471Source: NC Employment Security Commission

Total Jobs: 185,487

Source: NC Employment Security Commission

Jobs By Sector in District 8, 2000

Agriculture, Forestry, and Fishing

2%

Fabricated Metal Products1%

Furniture and Fixtures1%

Industrial Machinery and Equipment

1%

Transportation Equipment1%

Transportation, Communication, and Utilities

3%

Rubber and Misc Plastics2%

Construction9%

Government18%

Services18% Finance, Insurance, and

Real Estate2%

Primary Metal Industries1%

Wholesale Trade5%

Retail Trade19%

Apparel2%

Lumber and Wood Products2%

Textile Mill Products11%

Food and Kindred Products2%

Wages in the Declining and Growing Industries?

• Average Annual Wage in Declining Industries in District 8:– Apparel: $20,300

– Textiles: $25,300

• Average Annual Wage in Growing Industries in District 8– Industrial Machinery Industries: $32,500

– Transportation Equipment: $35,000

– Services: $22,879

Trade Adjustment in North Carolina, 1986-1992

Textiles Apparel Other Manufacturing

Percentage Re-employed 90.6 86.4 93.9

Average Duration of Unemployment (Months)

6 7 6

Ratio of New Wage to Old Wage

99 1.22 .90

Alfred J. Field and Edward M. Graham 1997. “Is There a Special Case for Import Protection for the Textile and Apparel Sectors Based on Labour Adjustment?” The World Economy 20 (March): 137-57.

In All of Manufacturing, 1990s• Fate of all NC Manufacturing workers who lost their

jobs during 1990s (regardless of reason)• 75 percent found new jobs paying 80 to 100 percent of

old wage within one year.• Patterns in Rapid Re-employment:

– Gender: No Pattern– Race: No Pattern– Age: Workers 55 or older had a harder time finding new jobs

than younger workers– Education: Workers with High School or Less Education had

lower re-employment rates than workers with more education.

Source: NC Employment Security Commission, Mass Layoffs in the North Carolina Economy.

North Carolina and NAFTAChange in North Carolina Exports to Mexico, 1997-2000

-100

-50

0

50

100

150

200

250

Man

ufact

uring

Proce

ssed

Foo

ds

Fabric

Mill

Pro

ducts

Non-Appar

el T

extil

e Pro

duct

s

Appare

l

Wood P

roduct

s

Paper

Pro

ducts

Printin

g and

Relat

ed P

rodu

cts

Chemic

al M

anufa

cture

s

Plast

ic a

nd R

ubber P

roduct

s

Compute

rs a

nd Ele

ctronic

s

Elect

rical

Equip

ment

Furnitu

re a

nd R

elat

ed

Mis

c Man

ufac

ture

s

Crops

Per

cen

t C

han

ge

Source: U.S. International Trade Administration Websitehttp://www.ita.doc.gov/

Labor Compensation: MNCs vs. Local Firms

(thousands of US dollars)

All Countries

High Income

Middle Income

Low Income

Average Wages Paid by MNC Affiliate

15.1 32.4 9.5 3.4

Average Wages Paid by Local Firms

9.9 22.6 5.4 1.7

Ratio 1.5 1.4 1.8 2.0

Labor Compensation By MNCs(thousands of US dollars)

High Income

Middle Income

Low Income

Ratio High/Low

All Industries 45.9 19.3 10.1 4.5

Petroleum 72.8 30.7 25.4 2.9

Manufacturing 45.0 14.1 4.9 9.2

Services 42.4 19.7 25.8 1.6Source: Edward Graham. 2000. Fighting the Wrong Enemy. Washington, D.C.: Institute for International Economics.

Mexico In PerspectiveMexico's Economy as a Percentage of the U.S. Economy

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

1991 1992 1993 1994 1995 1996 1997 1998 1999

Source: World Bank, World Development Indicators on CD-ROM, 2001

Mexico’s TradeMexican Exports

0

20,000,000,000

40,000,000,000

60,000,000,000

80,000,000,000

100,000,000,000

120,000,000,000

140,000,000,000

160,000,000,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

US

Do

llars

Source: World Bank, World Development Indicators on CD-ROM, 2001

Rising IncomesPer Capita Income, Mexico

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

US

do

llars

Debt Crisis

1994 Peso Crisis

Trade Liberalization Begins

NAFTA Period

Source: World Bank, World Development Indicators on CD-ROM, 2001

US Trade and US Trade With Mexico

0

20000

40000

60000

80000

100000

120000

140000

JAN 9

8

MAR 9

8

MAY 9

8

JUL 9

8

SEP 98

NOV 9

8

JAN 9

9

MAR 9

9

MAY 9

9

JUL 9

9

SEP 99

NOV 9

9

JAN 0

0

MARCH 0

0

MAY 0

0

JULY 0

0

SEPT 00

NOV 0

0

JAN 0

1

MARCH 0

1

MAY 0

1

JULY 0

1

SEPT 01

NOV 0

1

$US

Mill

ion

s

Exports to Mexico Imports From Mexico Total Exports Total Imports

U.S. Accounts For:80% of Mexico’s Exports74% of Mexico’s Imports

Source: U.S. International Trade Administration Websitehttp://www.ita.doc.gov/