As the world's largest R&D cluster, Silicon Valley brings untold economic benefits to the United States. The valley is also a prime example of how R&D in specific industries tends to stay tightly concentrated in a single region. Public support for R&D can help improve the odds that the next Silicon Valley is located in the United States.
Reshoring Optimism, But Not Much Else
While many news sources have reported that manufacturing jobs are returning to the United States, manufacturing employment and firm number data show that reshoring is a myth. To attract jobs back, the United States will need to concentrate on boosting R&D, improviWhile many news sources have reported that manufacturing jobs are returning to the United States, manufacturing employment and firm number data show that reshoring is a myth. To attract jobs back, the United States will need to concentrate on boosting R&D, improving productivity, and implementing corporate tax reforms.
The Roots of Right-Wing Anti-corporate Populism
There is a rising tide of right wing, anti-corporate populism – with designs on preventing all government support for business – that could greatly hinder American economic policy and hamper future U.S. competitiveness.
Time for a Grand Bargain on Corporate Tax Reform
The recent debate over corporate inversions (U.S. companies reincorporating themselves in nations with lower tax rates) threatens to derail progress on comprehensive tax reform even further. The administration and some in Congress seem set on treating the symptom rather than the disease. This is unfortunate because broader reform is both necessary and doable.
The United States is Slipping in Triadic Patents
Triadic patents, are patents filed jointly with the United States Patent and Trade Office, the European Patent Office, and the Japanese Patent Office, represent inventions with potentially global economic impact. A serious decline in U.S. triadic patents is the latest warning sign of diminished American innovation in advanced industries.
Worry About Slow Productivity Growth, Not Fast Productivity Growth
A recent report on US productivity growth confirms that we need more proactive public policies that encourage investment and growth. While many see new technology as responsible for high unemployment now or in the future, the truth is close to the opposite. Employment growth requires new investment and new investment goes hand in hand with productivity growth.
The Export-Import Bank's Vital Role in Supporting U.S. Traded Sector Competitiveness
As the official export credit agency of the United States, the U.S. Export-Import (Ex-Im) Bank plays a vital role in fostering U.S. traded sector competitiveness and facilitating exports of innovative U.S. products and services to foreign markets. The bank provides financing for export transactions that might not otherwise occur when private commercial lenders are unable or unwilling to provide financing to foreign purchasers of U.S. exports and plays a key role in leveling the playing field for America’s exporters by matching the credit support that other nations provide, ensuring that U.S. exporters are able to compete based upon the price and performance features of their products. In 2013, the Ex-Im Bank supported over $37 billion in U.S. exports—many of which would not have been possible without Ex-Im assistance—which supported over 200,000 jobs at more than 33,000 firms or their suppliers.
Yet the Ex-Im Bank is under heavy attack from a variety of ideological and special interest critics who oppose the Banks’ very existence. Populist opponents, from both the left and right, oppose the Bank as mere big business “crony capitalism” and a manifestation of unnecessary government intervention into market forces. Other groups have made unsubstantiated claims that the bank’s export credit assistance distorts capacity in markets such as the global aviation industry. Yet there is scant evidence that the global aviation industry suffers from sustained structural overcapacity or that export credit finance contributes to overcapacity in any meaningful way. This report debunks the fallacious claims of both the Bank’s ideological and special interest opponents, which have been designed to obscure the instrumental role the Ex-Im Bank plays in supporting U.S. manufacturing and services exports.
The reality is that the export credit finance the U.S. Ex-Im Bank provides is needed now more than ever, especially as foreign export credit competition continues to intensify. For example, in 2013, China issued three times as much new medium- and long-term export credit than the United States did (China’s $45.5 billion compared to America’s $14.5 billion) and over the past five years China and Germany issued four and five times much export credit as a share of GDP, respectively. If the Ex-Im Bank were disbanded as critics desire, leaving the United States unable to provide export credit assistance to foreign purchasers of U.S. products and services in situations where private sector lenders are unable to do so, the simple reality is that U.S. exports of aircraft, locomotives, power-generation equipment, and thousands of other products and services would be replaced by those of Asian or European producers, whose still-operating export credit agencies would step in to fill the void.
In short, failure to reauthorize the Ex-Im Bank will have far reaching negative results, including fewer U.S. exports, fewer U.S. jobs, and higher U.S. trade deficits. Therefore:
- With Congressional authorization of the U.S. Export-Import Bank set to expire on September 30, 2014, Congress should move expeditiously to reauthorize the Ex-Im Bank for a new five-year term.
- Congress should raise the Ex-Im Bank’s current exposure limit (i.e., lending cap) of $140 billion to at least $160 billion by 2018, ensuring that American exporters don’t fall behind foreign competitors, whose countries are investing substantially more in export credit finance as a share of their GDP than the United States.