Howard F. Rosen of The Peterson Institute for International Economics presented a testimony on International Trade to the Senate Finance Committee Subcommittee this month. He argues that “In order to avoid another financial crisis and recession, it is imperative that America produce more than it consumes and increase the amount of goods and services it exports.”

The following are some of the key takeaways from his interesting testimony:

• Only 4% of the U.S. companies export
• Just five hundred companies account for 60% of all U.S. exports
• 58% of exporting companies trade with only one country
• Exporting firms produce twice as much and employ twice  as many workers as nonexporting companies
• US exports of Goods and Services account for just over 10% of the GDP. This is much less than the figure for other countries such as China, Canada, Japan, etc. as shown in the table show below:

• The US economy is dependent on foreign capital due to low household savings and rising government and private debt
• Since 2000, the US net debtor position has been increasing at a rate of 23% per year which is more than four times the annual growth of the US economy
• The only way the US can get out of the economic mess is to increase exports significantly
• Since 1977, we have been consuming more than we produce and hence the gap between consumption and production rose to 5% of the GDP in the last three decades
• To reduce our dependence on foreign capital, we must increase the national saving rate and reduce the federal budget deficit
• Printing more money is not an option since it “brings back images of Germany in the 1920s, Hungary immediately after World War II, and Argentina, Bolivia, and Israel during the 1980s, when store prices changed several times a day.”
• Individuals must reduce their own debt since the total outstanding household debt is $13.7 Trillion, a little less than our Total GDP
• Increasing exports would create plenty of high-paying and sustainable jobs thereby eliminating the “jobs deficit” currently weighing down the economy
• Since the US has comparative advantage in many products, we must improve both the quantity and quality of products and services we export
• Similar to other countries the US should offer more incentives for firms to export. Funding for export promotion efforts must be raised since it fell by an average of 8% every year from 2004 thru 2008