Most people do not understand the extent to which Wisconsin is engaged in international trade. Now, I want to take a look at exporting in Wisconsin and discuss some factors that play a role in determining a state's activity level. I will use data from the U.S. Census Bureau and the Wisconsin Department of Revenue.
The statistics show that Wisconsin exported about $20 billion worth of goods and services to the rest of the world. Wisconsin's top six exporting markets are Canada (about 30 percent of the total), Mexico (10 percent), China (7 percent), Germany (4 percent), Australia (3.8 percent) and Japan (3.8 percent). Rounding out Wisconsin's top 10 export destinations are the United Kingdom, Chile, Brazil and France. In addition, agricultural products (excluding processed foods) are estimated to add an additional $850 million to the state's export total.
From this information, it is clear that Wisconsin is highly engaged in the global economy. One might infer from this that a large number of jobs in the state are dependent on international trade. So how does Wisconsin compare to the U.S. in terms of exporting activity? For the last few years, Wisconsin has accounted for about 1.5 percent of U.S. exporting activity. Since Wisconsin's population is about 1.8 percent of the U.S. population (5.72 million/313.91 million), one might expect that our exports would account for about 1.8 percent of the U.S. total. However, this is not the case. In other words, on a per capita basis, we tend to export a little less than the rest of the country.
There are many factors that can influence the exporting activity of a state. The following are some examples: (1) a state that ships intermediate products to another state for final assembly and export will have its exporting activity undercounted; (2) some products are better suited for export than others, e.g. products that lose weight in the production process are easier to ship than products that gain weight in the production process; (3) a state's access to international transportation networks plays a big role in determining transportation costs ; (4) a state's location and proximity to foreign markets also has an impact on shipping costs.; (5) a state's regulations and assistance programs can either help or hinder exporting activity; and (6) a state's entrepreneurial culture or lack thereof can play a huge role in influencing the amount of exporting.
What does Wisconsin export to the world? The largest export categories are as follows: Machinery accounts for $5.4 billion or 27 percent of Wisconsin, exports. Construction machinery is the most important item, followed by general purpose machinery, engines, turbines and transmission equipment. Not surprisingly, the largest importers of our machinery are Canada, China, Chile and Australia.
Computers and electronics rank second, at $3.4 billion or about 17 percent of total exports. Navigational, medical and control instruments represent the largest share. Computer equipment and semiconductors are the next largest component, and China, Japan, Canada and France buy the bulk of these items.
Transportation equipment ranks third in terms of exports, at $1.8 billion or 9 percent of exports. Motor vehicle parts account for more than half of this total. Aerospace products and parts represent about a fourth of this category. Canada, Mexico, Germany, United Kingdom and Australia are the top destinations for transportation equipment.
The processed foods category accounts for $1.3 billion or about 7 percent of Wisconsin's exports. Meat products account for about 25 percent of the processed food total, and dairy products account for an additional 25 percent of the total. Food (not elsewhere classified) accounted for about 16 percent of the processed foods exporting total.
Chemical products were valued at $1.2 billion or 6 percent of total exports, and they include items such as pharmaceuticals, basic chemicals and cleaning products. Paper industry exports were about $840 million or about 4 percent of export activity. Lastly, the export value of agricultural and livestock products was about $850 million. The top products were oilseeds and grain, other animal products and forestry products.
Randy Cray, Ph.D., is the chief economist at the University of Wisconsin-Stevens Point's Central Wisconsin Economic Research Bureau.