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Kentucky’s Exports to the EU Shrink in 2010

July 7, 2011
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As I reported in February, exports from the Midwest to the 27 member states of the European Union tended to grow in 2010.  Unfortunately, Kentucky was the only state of the six examined which saw a decrease in exports to the EU, as they declined from $5.6 billion in 2009 to $4.7 billion in 2010 (see figure 1).  Despite this decline, the EU was still the destination for a quarter of all Bluegrass State exports.  While Kentucky ranks only 21st among the 50 states in absolute terms of exports to the EU, the Bluegrass State still has one of the largest exports to the EU as a percentage of the state’s output as the previous blog showed.

Source: World Institute for Strategic Economic Research

As figure 1 and 2 show, the changes in the Bluegrass state’s exports to the EU have not been uniform.   While many sectors have recovered from the economic slowdown in 2009, transportation equipment, which once accounted for more than half of all exports in 2009, suffered dramatically decreased by 33% between 2009 and 2010.  However, over the past nine years, Kentucky’s exports had doubled, as shown in figure 2 (100% equals 2000 figures)—before declining in 2010.  Within the sectors, some have made dramatic increases, such as “miscellaneous manufactured commodities,” which increased more than tenfold between 2000 and 2010.  The other big increase was in chemicals, which saw a 425% increase.  On the flip side, livestock sales have steadily declined, and are now worth only 70% of their 2000 value.

Source: World Institute for Strategic Economic Research

Kentucky’s main European trading partners are fairly similar to its northern neighbors, Indiana and Ohio.  As figure 3 shows, the United Kingdom accounted for 28.7% of all Kentucky exports to Europe, as was the second largest trading partner for Kentucky after Canada.  In addition, exports grew to Europe’s third largest economy, even through the UK’s economy actually shrank in 2010.  In addition, Germany imported $219 million more, as the largest European economy grew dramatically in 2010.  Similarly, the Dutch economy also experienced a positive 2010, and this is reflected in a $123 million increase in imports from the Bluegrass State.

Source: World Institute for Strategic Economic Research

On the negative side, the destination which saw the greatest decrease was France.  As figure 4 shows, France had been the main European trading partner for Kentucky from 2004 to 2009, accounting for just less than a third of the Bluegrass State’s to Europe in 2009.  However, between 2009 and 2010, France’s imports declined by 69% ($1.18 billion).  The explanation for this decline is that transportation equipment exports to France fell by 71% ($1.22 billion).  In fact, Kentucky exports to the other 26 EU members increased by $307 million.  Even within France, excluding this sector, total exports increased by $38 million.

Source: World Institute for Strategic Economic Research

As a result, while Kentucky’s overall export picture to Europe in 2010 might appear to be negative, excluding transportation equipment destine for France, the situation is actually looking to improve.

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