Analysis of Declining U.S. Export Market Share (1984-2010)
Overview
From 1984 to 2010, the U.S. share of global exports of goods fell by almost one-third. It remained relatively stable at around 12 percent through 1999, then dropped 3.5 percentage points between 2000 and 2010. Data on the export of certain services reveals a similar decline in the U.S. services market share during the 2000-2008 period, falling from approximately 25 percent to just above 5 percent. This decline across both goods and services suggests factors beyond a simple shift from manufacturing to services are at play.
Merchandise Trade Focus
Due to limited data on services trade, this analysis focuses on merchandise trade to understand the declining export market share. Examining the contributions of different product groups to the 3.5 percentage point drop in goods export share reveals that virtually every sector experienced a decrease in market share from 1984 to 2008.
Sectoral Contributions
The machinery and transportation equipment sector contributed the most to the overall decline, accounting for half of the decrease. This is partly due to the sector’s significant share (almost half) of U.S. exports. Within this sector, the decline in the U.S. share of office machine and computer exports was particularly striking, falling from about one-third of total world sales to just under one-tenth.
Commodities, representing approximately a quarter of U.S. export sales over the 25 years examined, also contributed significantly to the decline. Crude materials (including metals and minerals) and food and live animals accounted for about 1.5 percentage points, or 43 percent, of the overall change.
Commodity Price Effects
The importance of commodities suggests that declining competitiveness may not be the sole explanation for the shrinking U.S. export share. Commodity prices fell throughout most of the period, impacting U.S. revenue from commodity sales and, consequently, its share of world exports. This is supported by price trends for specific commodities like corn and soybeans, which fell in the late 1990s and remained low until 2006, mirroring the decline and subsequent leveling off of the U.S. export share.
Intensive and Extensive Margins
The decline in the U.S. aggregate share reflects both a decline in market share within each sector (intensive margin) and a decline stemming from changes in the size of each category relative to world exports (extensive margin). For example, corn contributes to the decline when the U.S. captures a smaller proportion of the corn-specific export market (intensive) and when corn’s share of overall world exports declines (extensive).
Competitiveness is more closely related to the intensive margin, as it reflects the U.S. share within a specific market. While specializing in faster-growing sectors might be preferable, over the relatively short period analyzed, the sector composition of exports likely didn’t change drastically.