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Cities look abroad for economic hope

By Lisa Lambert

WASHINGTON (Reuters) - Whipped by the recession and financial crisis, U.S. cities are looking far beyond their borders to grow their local economies.

At a meeting this week in the U.S. capital, mayors from across the country have focused intently on the promise of exports for generating jobs and economic activity.

"The largest single opportunity to create jobs at a local level may well be in helping a small business in Minneapolis-St. Paul, or any other American city, sell to the globe," said Minneapolis Mayor R.T. Rybak. "Our economy is growing again, but nowhere near as fast as the rest of the world."

Metropolitan areas account for 88 percent of the nation's exports, according to a study conducted by IHS Global Insight and released by the U.S. Conference of Mayors. Moreover, the 20 biggest metropolitan areas make up 50 percent of the total U.S. share of exports.

The housing bust put many people in the construction industry out of work, and it was followed by a recession that caused thousands of layoffs. In 2011, local and state governments, crunched by revenue drops, slashed their payrolls, primarily in education.

Now the national unemployment rate has been above 8 percent for 35 straight months. While it has recently edged down to 8.5 percent, cities - where most Americans live and work - are eager for it to drop faster.

As president of the conference, Los Angeles Mayor Antonio Villaraigosa is calling on cities to draft metropolitan export plans and coordinate within regions to create industry clusters and fill gaps in services.

"Generally, our export systems are fragmented and un-focused. They're not integrated to get the greatest return on investment," Villaraigosa told a meeting of the mayors.

EXPORTS ALSO APPEAL TO STATES

State governments see economic promise in exports, as well. Last February, the National Governors Association signed a concord with China to increase economic opportunities, with Washington Governor Christine Gregoire saying that "expanding exports is key to our economic recovery."

IHS found that for smaller cities, exports can have a large impact, noting that exports represent more than half the economy of Peoria, Illinois.

Northern cities tend to export to Canada, while southern cities send goods and services to Mexico, Venezuela and Canada, IHS found.

At the meeting, mayors defined exports widely, mentioning tourism and education as two promising sectors.

"The old way of looking at exports was a product you loaded onto a container," Rybak said. "That's still the case, but it's also the service performed by the consultant."

Cities could face challenges boosting exports, from slowness at the federal level in authorizing money for infrastructure repairs to taxpayer reticence to sending officials on foreign trips.

There is also the problem of the U.S. trade deficit, which widened in November to its largest in five months. Imports rose 1.3 percent that month, while exports fell 0.9 percent.

Bruce Katz, who leads the metropolitan policy program at the Brookings Institution, told the mayors that when it comes to exports the United States is an "emerging market."

"For a long time, the U.S. has been very inward focused. We're a very large market ... we haven't had to look out," he said. "Because domestic demand is crippled after this recession, and global demand is rising ... we've got to make the case to look outside our borders."

Brookings, a Washington think tank, is collaborating with the mayors to track cities' export programs.

Rybak, whose constituents do not all smile on sending out trade delegations, said "developing a local export plan doesn't mean spending more money. In fact, we need to do a better job of taking existing organizations and resources and aligning them."

His city is working to use established "sister city" relationships, reaching out to foreign graduates of local universities, and finding jobs for high school students originally from places such as Somalia at global companies.

(Reporting By Lisa Lambert; Editing by Gary Crosse and Jan Paschal)

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