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2009 a mixed picture for Indiana’s exports to Western Europe

April 2, 2010
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On Wednesday, I wrote about how Indiana’s exports to the EU decrease by 5.9% in 2009, and some exports in some sectors (notably chemicals) grew in the last year.  As Figure 1 shows, a majority of Indiana’s exports to the EU go to just three countries—the United Kingdom, France, and Germany.  This is not surprising, since those three countries are the largest economies in the EU.  However, Indiana’s next three largest trading partners are somewhat surprising, as they are not necessarily the next largest economies in the EU (the Netherlands are the 6th largest economy in the EU, while Spain is 5th, Ireland 13th, and Belgium 8th in 2008).

Figure 2 shows the change in Indiana’s exports to West European countries in the past year.  While trade with the EU’s 27 members dropped by $410 million in the last year, trade with the 16 EU members who also use the euro (the Eurozone) actually increased by 1.6% or $70 million.   Specifically, Indiana’s trade grew with five West European countries, including substantial increases with Ireland and Luxemburg.  The state’s trade with Luxemburg increased by 935%, although this was from a tiny $1.6 million to $16.4 million.  More significantly, Indiana’s trade with Ireland grew by 188% (or $289 million) to $443 million, making it now Indiana’s sixth largest European trading partner.  This growth is particularly impressive since Ireland’s economy contracted by an estimated 7.3% in 2009.  Interestingly, the export sectors that grew the most from Indiana to Ireland were food products (49.7%), computer and electronic products (41.2%) and chemicals (29.1%).

As rmcooper4 pointed out, as Indiana’s economy diversifies from being based on transportation manufacturing to pharmaceuticals and the life sciences, it is not surprising that trade in transportation equipment dropped while chemicals increased, and this is what we also see at the national level.  Even in the United Kingdom (whose imports from Indiana dropped by far the most in the past year in absolute terms), manufactured and transport equipment all faced double digit decreases, while chemicals actually increased by 6.2% or $60 million.  The same is true in Germany, which saw a decrease in most areas except for chemicals (up 3.7% or $24.5 million), and computer and electronic products (up 60.1% or $54 million).

Even during these hard economic times, where Indiana’s GDP is expected to have fallen by 3% in 2009 and overall exports fell by 13.7%, the state has seen some increases in trade, especially in Europe’s second tier of economies.  Perhaps even more importantly, while the 2009 trade data reflects Indiana’s shrinking manufacturing base, exports have grown in important areas such as chemicals.

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