you would think that Massachusetts, a leader in many cutting-edge economic sectors, would have a comprehensive overall strategy to ensure that it has a competitive edge in the global economy. Unfortunately, the Commonwealth does not have such a plan. As a result, we are beginning to fall behind other states in the race to secure our piece of the global economy.
The Senate Post Audit and Oversight Committee recently examined this issue and developed recommendations to bolster the Commonwealth’s position in an increasingly globalized world. The committee’s report, Getting in the Game: Increasing Massachusetts’s Presence in a Globalized World, calls for the creation of a Global Competitiveness Advisory Board composed of business and academic leaders, as well as policymakers, who would develop a comprehensive plan for increasing the Commonwealth’s global competitiveness in various sectors.
We must develop innovative strategies, use our resources (which include tremendous political capital and our leaders in Congress), and brand Massachusetts as a leader in foreign markets. In order to accomplish this goal, we must develop a plan to enhance our international trade agenda.
Massachusetts is maintaining or surpassing its performance on certain economic indicators. If running alone in this global race, we would appear to be in good shape. For instance, the total dollar value of the Commonwealth’s exports have increased substantially over the past few years. But Massachusetts is not alone in this race. We are competing with not only every other state, but with every other country in the world, for our piece of the global economy.
Massachusetts cannot be satisfied with simply seeing the total dollar value of its exports increase every year while it lags behind the competition. States that had exported less than the Commonwealth are now exporting more. While Massachusetts exported more, in terms of total dollar value, than Pennsylvania from 1999 through 2004, Pennsylvania now exports $2 billion more than Massachusetts. From 1999 to 2006, Massachusetts’s rank among states in the total dollar value of exports fell from ninth to 11th place. From 2004 to 2006, our rank among states in terms of exports as a percentage of gross state product fell from 14th to 20th.
Pennsylvania has surpassed Massachusetts because it has created more opportunities in the international market, capitalized on those opportunities, and made a greater investment in international trade. In 2006 Pennsylvania’s budget allotted $20.7 million for international trade promotion, including export assistance and establishing trade offices across the world. In 2006, Massachusetts’s budget allocated less than $1 million for similar purposes.
Massachusetts’s lack of investment in international trade policy is reflected in the state’s number of overseas trade offices and the frequency of trade missions taken by state leaders. Over the course of the 1990s, the Commonwealth had trade offices in 13 overseas locations. That number has been reduced to four locations: China, Brazil, Germany, and Mexico. Meanwhile, Gov. Patrick’s recent trade mission to China was the first such governor-led trip since 2000.
In order to get Massachusetts back in the game, the Senate report, which was hailed by Secretary of Housing and Economic Development Daniel O’Connell as being “in complete alignment with the priorities of the Patrick/ Murray administration,” recommends an increase in the number of governor-led trade missions.
The trade mission to China, in which the governor was accompanied by business executives, academic leaders, and top policymakers, is an example of the aggressive approach necessary for Massachusetts to develop much-needed partnerships overseas and promote the state’s higher education programs, life sciences resources, and clean energy sector.
Trade missions have in the past been the target of criticism from those who view such trips as wasteful, but they help improve the Commonwealth’s brand on the global stage and connect Massachusetts companies with foreign buyers. For example, during his recent trip, Gov. Patrick secured an agreement between the Massachusetts Medical Device Industry Council (MassMEDIC) and the Chinese Association for Medical Device Industry to promote economic partnerships. Trade missions are essential for increasing Massachusetts’s global image and brand.
Gov. Patrick’s plan to pump $1 billion into the life sciences sector will help to further the growth of an already expanding industry here in Massachusetts. A comprehensive trade strategy will help to connect foreign buyers to our products and show the world our commitment to innovative economic sectors, including life sciences, clean energy, and renewable energy sources. The trade mission to China is a good first step as part of a larger strategy that should embrace markets across the world.
The Senate report also recommends an increase in the number of reverse trade missions, in which foreign leaders travel to Massachusetts in order to strengthen ties, exchange innovative ideas, and forge new partnerships with policymakers and business leaders in the Commonwealth.
The markets in India and China represent enormous opportunities. However, former Harvard president Lawrence Summers, now a professor of economics there, rightly points out that Boston is one of the farthest US cities from the Pacific and is one of the closest major US cities to Europe. Summers recommends that Massachusetts work to make itself an economic gateway to Europe.
We must also focus on attracting more foreign students to study at the renowned higher education institutions in Massachusetts. Research shows that even as a world-class leader in higher education, Massachusetts has been unable to maintain its competitiveness in attracting foreign students. In recent years, the number of foreign students who chose to study in Massachusetts declined by 2,000 students, or approximately 7 percent. This decrease represents an estimated $63 million loss of tuition, fees, and living expenses from foreign students and their families.
However, the true economic impact of a robust foreign student population is much greater than just their direct spending. Attracting foreign students to Massachusetts’s colleges and universities helps to advance the pace of innovation and to build positive and meaningful relationships between Massachusetts and countries around the world. According to top educational leaders, attracting foreign students to the United States has become much more difficult due to the war in Iraq. As a result, it is important that Massachusetts aggressively markets itself to foreign countries as a leading, and welcoming, center for higher education.
Globalization has presented Massachusetts with increased competition from around the world, but a global economy also presents us with the opportunity to create new partnerships. It’s time we start opening those doors, instead of closing them. Gov. Patrick’s trade mission to China was a valuable first step.Enhancing the Commonwealth’s competitiveness cannot be done without the combined efforts of both the public and private sectors. The Commonwealth can no longer afford to sit on the sidelines. It is time to get back in the game.
Marc R. Pacheco is chairman of the Senate Committee on Post Audit and Oversight.