Exports growing in Illinois’ high-tech sectors

August Index Update

The volume of goods and services exports is an important indicator of connectivity with global markets and, more broadly, national and local economic health. Last August, the Index highlighted how goods exports in Illinois outpaced average national growth from 2002 to 2012.

This issue of the Index focuses on state-level export data from 2009 to 2013 to understand how Illinois has performed post-recession. Since 2009, goods exports have increased 58.8 percent, from $41.6 billion that year to $66.1 billion in 2013; this growth outpaced the national average of 49.6 percent over the same period.

Illinois exports outpaced national average growth in eight high-tech industries

Four of Illinois’ 14 high-tech1 industries—precision instruments, pharmaceuticals, communications equipment, and magnetic and optical media—notched record goods export values in 2013. Moreover, from 2009 to 2013, eight of Illinois’ high-tech industries saw goods exports grow at a compound annual growth rate (CAGR) exceeding the U.S. average. In fact, Illinois more than tripled the national average CAGR in pharmaceuticals from 2009 to 2013.

US & Illinois high-tech goods exports

Illinois ranks among top states by value of high-tech exports

In aggregate, Illinois’ high-tech goods exports constitute 20.2 percent of total goods exports from the state. This portion translates to $13.4 billion in high-tech goods exports in 2013, a volume that places Illinois among the nation’s top states. Illinois also performs well in non–high-tech goods exports ($52.7 billion in 2013), especially agricultural commodities and heavy machinery, with local Fortune 100 companies such as Archer Daniels Midland, Caterpillar, and Deere exporting worldwide.

Illinois’ high-tech goods exports grew at a CAGR of 4.5 percent from 2009 to 2013, slower than the national average CAGR of 7.4 percent. This performance suggests that Illinois could benefit from expanding its goods export base beyond agriculture and machinery and by encouraging more companies, specifically small and medium enterprises (SMEs), to pursue global opportunities.

Top 10 states by value of high-tech goods exports

Driving exports among small and medium enterprises (SMEs)

Illinois is home to many major exporters and, similar to our peer states, has rebounded strongly since the recession. However, Illinois could further increase exports by encouraging growth beyond the state’s largest companies. In 2011, the most recent year for which data from the International Trade Association are available, Illinois SMEs fell below the national average, accounting for only 90 percent of the state’s exporters (compared with 98 percent nationally) and 23 percent of goods value exported (compared with 33 percent). As a result, several national and local agencies have identified SMEs as priority targets.

In 2010, President Obama launched the National Export Initiative (NEI), which was followed by four years of record-breaking exports and the growth of U.S. exports from $700 billion in 2009 to $2.3 trillion in 2013. Earlier this year, the administration announced a new phase of this strategy, NEI/NEXT, which is designed to institutionalize this progress and serve as a framework for the development of new export initiatives.

In alignment with NEI/NEXT, the Illinois Department of Commerce and Economic Opportunity’s (DCEO) Economic Development Plan and World Business Chicago’s (WBC) Plan for Economic Growth and Jobs both outlined concrete strategies to promote export growth by connecting local companies with more global market opportunities. These strategies build on an existing suite of Illinois programs such as the Illinois State Trade and Export Promotion (ISTEP) program, which provides technical and financial assistance to SMEs to participate in trade missions; in a trip earlier this year, 15 SMEs secured future deals worth an estimated $14 million. This initiative—along with other resources offered by the state’s Office of Trade and Investment, the U.S. Export Assistance Center, the Chicagoland Chamber of Commerce, and others—provides a solid foundation on which to build more connections between SMEs and export markets around the world.

The Index will continue to monitor and provide updates on Illinois export performance.

About the data

All state export statistics in this report are drawn from the U.S. Census Bureau’s Origin of Movement (OM) state-based export series.2 This data set assigns all export value to the state that manufactures the final product to be exported; in some industries, components are manufactured in one location but assembled in states with ports to ease transport costs. As a result, most of the top export states by origin of movement have active ports.

  1. The OM series is based on information supplied by U.S. exporters on official Shippers Export Declarations (SEDs) for goods leaving the United States. The OM series seeks to measure state exports on the basis of transportation origin—for example, the location from which exports begin their journey to the port (or other point) of exit from the United States. The OM series covers exports of merchandise only. Exports of services are excluded from the data. ?
  2. High-tech sectors selected according to Bureau of Labor Statistics guidelines for North American Industry Classification (NAICS) industries. Utilities, information, service, and wholesale sectors were excluded when data were unavailable. ?

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