September 2010 ITU
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- Emerging Metropolitan Sectors: A Fertile Market for U.S. Exports
- Bringing U.S. Products to the World
- Opportunities in the Global Marketplace for Minority Businesses
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Emerging Metropolitan Sectors: A Fertile Market for U.S. Exports
In a presentation to the U.S.-India Business Council earlier this year, Francisco Sánchez, under secretary for international trade, outlined the International Trade Administration’s strategy for expanding U.S. export opportunities in second-tier markets, the Growth in Emerging Metropolitan Sectors (GEMS) initiative. (photo courtesy of U.S.-India Business Council)
In the coming years, rapid growth in developing economies will drive demand for infrastructure development and consumer goods. A new initiative from the International Trade Administration (ITA) is designed to help U.S. companies, especially smaller firms, take advantage of those expanding markets.
by Anusuya Sivaram
The so-called BRIC countries—Brazil, Russia, India, and China—have been the cornerstone of growth strategies for many multinational enterprises during the past decade. Those firms’ efforts have largely been focused on selling to major urban centers in those four countries. But export opportunities in these emerging markets need notbe limited to the biggest cities nor restricted to larger companies. That concept underlies a new initiative from ITA—Growth in Emerging Metropolitan Sectors (GEMS)—that was unveiled recently by Francisco Sánchez, under secretary for international trade.
“Before us is the prospect of creating a new world through much-needed infrastructure, while introducing new technologies simultaneously,” said Sánchez in remarks to the U.S.–India Business Council in Washington, D.C., on June 30. “If we do this right, we will create growth at increased rates and transform the world as we know it today. We live in an age when the new global economy can explode and change the trajectory of humankind to create a new world.”
GEMS will play an important role in ITA’s strategy to realize the goals of President Barack Obama’s National Export Initiative (NEI), which calls for doubling U.S. exports during the next five years. GEMS embraces the notion that export-driven growth will result from small and medium-sized enterprises working with their counterparts in smaller, fast-growing cities in emerging markets. Ultimately, such growth will create jobs in the United States and will generate sustainable, long-term growth in the global economy.
Reform Brings Opportunities
In recent years, BRIC countries and other emerging economies, such as Indonesia and Turkey, have adopted structural and market reforms that have contributed to the liberalization of their economies, thereby creating opportunities for increased investment and trade. The effects are evidenced by a rapidly growing middle class in these countries and the emergence of innovative new firms in various sectors.
While these emerging economies have sustained high real growth in gross domestic product during the recent financial crisis, they have also experienced a large amount of urbanization and industrialization. This has led to significant gaps between their current infrastructure and future needs.
For example, according to McKinsey Global Institute, India will need to invest $143 billion in health care, $392 billion in transportation infrastructure, and $1.25 trillion in energy production by 2030 to support its rapidly expanding population. Similarly, China will need to pave more than 5 billion square meters of roads by 2030 to meet the transportation needs of its 221 cities with populations of more than 1 million. Brazil will need to spend $19 billion on infrastructure improvements to its 20 main airports to meet an expected threefold increase in traffic during the next 20 years.
With those infrastructure needs, along with a growing demand for consumer goods, the emerging metropolitan sectors within BRIC countries will be excellent markets for U.S. goods and services.
ITA Efforts
Under GEMS, ITA will be engaging its global network of trade experts to host conferences, to leverage public–private partnerships, and to conduct trade missions to those emerging markets in order to connect U.S. exporters to sales opportunities (see sidebar).
According to Sánchez, ITA “will be managing the GEMS strategy and working to leverage the federal government to provide additional momentum to the economic growth of these [emerging metropolitan markets] that can help American companies simultaneously.” Sánchez added that he would personally lead meetings with federal agencies “to plan how we can elevate our involvement—within global trading rules—to add to the momentum that is already building.”
GEMS goes beyond increasing U.S. exports. It will not only help U.S. firms increase their exports and create jobs, but also deepen political ties between the United States and emerging countries. If the United States wants to stay relevant in an increasingly globalized world, it must explore and engage in opportunities and partnerships in those emerging markets. GEMS offers a logical first step in that direction.
Anusuya Sivaram is an intern in the Office of the Under Secretary in the International Trade Administration. Saum Ayria, also an intern at the International Trade Administration, assisted in the preparation of this report.
India Visit to Highlight Opportunities for U.S. Firms
A temple dedicated to the goddess Parvati in Pune, India. This city of 3.5 million, the cultural capital of India’s Maharashtra state, will host a U.S.-India business conference on September 28, 2010. (photo © N. Vasuki Rao/iStock)
Although ITA will be implementing its GEMS initiative worldwide, it has already taken steps to help U.S. firms enter the Indian market. Outside of major metropolitan areas such as Mumbai and New Delhi, additional opportunities exist in other Indian cities, such as Indore, Nagpur, and Pune. According to McKinsey Global Institute, those cities are 3 of the more than 68 Indian cities that are likely to have populations exceeding 1 million by 2030.
City and state governments in India are already investing millions of dollars in infrastructure development in those cities to attract both domestic and foreign firms. Pune, for example, recently invested $5.8 billion in an information technology park. Nagpur has spent more than $130 billion on a transportation hub.
On September 28, 2010, as part of GEMS, ITA will participate in a conference in Pune, which will be hosted by the Confederation of Indian Industries and the U.S.–India Business Council. The conference will showcase resources available to U.S. firms seeking to export to India, and will include representatives from the Indian government and the private sector. It will also highlight current and future opportunities for U.S. and local businesses to create partnerships and to contribute to the dynamic growth of emerging urban centers throughout India.
ITA's U.S. and Foreign Commercial Service (USFCS) has already helped numerous U.S. firms make sales in India. Among these is Suniva. This Norcross, Georgia, firm recently gained a foothold in India’s solar energy market with a project converting diesel-powered cell towers to more efficient solar cell towers. Renewable energy is destined to be a growing market for U.S. suppliers: India’s increased demand for energy is expected to be equivalent to 13 trillion tons of oil by 2030.
The USFCS has identified opportunities for U.S. exporters in a variety of other sectors, including information technology, health care, energy, and infrastructure. For more information about opportunities in India, visit the India Business Information Center or contact the Trade Information Center, 1-800-USA-TRAD(E) (1-800-877-8723).
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