Services exports are a critical and growing part of the economy
Services exports are a critical and growing part of the economy
When you think of American exports, you probably think of goods, like soybeans or airplane wings, which are grown or made in the U.S., put on a cargo ship and then bought by someone abroad. While goods do make up the bulk of American trade, services exports are also a critical and growing part of the domestic economy. They have been a positive contributor to GDP growth for almost every quarter over the past three years. And what’s considered a service export may surprise you.
It includes the work done by lighting designer Greg Guarnaccia. As a U.S. resident with clients abroad, he’s a services exporter — even if he hasn’t always looked at it that way.
“Not until you brought it up,” he laughed.
Guarnaccia started his career in theater, including work on and off Broadway. “I ran away with the circus for a period of time and did Euro circus shows around the world,” he said.
He then got into architectural lighting, designing the setups in hotels and museums, as well as lights for exterior projects, like monuments. His firm, International Light Studio, is based in Baltimore, but some of his work is overseas. He’s designed lighting for performing arts centers in Morocco and Jordan.
He’s also learned a lot about cultural preferences around light. He said in the U.S., we like a warm tone.
“But if you go to places like Asia — Thailand or Bali — where the climate is very hot, you tend to see a lot of very cool lighting,” Guarnaccia said.
Guarnaccia is sending his designs across borders. But sometimes people from other countries are consuming the exported service while in the U.S. Say, a French traveler comes to New York and buys a ticket to see the Statue of Liberty.
“In that sense, the Statue of Liberty is — she’s providing that service,” said Christine McDaniel, an economist at George Mason University.
McDaniel also helps create a services export. In her case, the product is education. She teaches college courses to students from foreign countries.
“For instance, the applied econometrics class I’m teaching this fall, most of the students are international,” she said.
And by the way, if Marketplace were to sell broadcast rights to this show overseas, then I’d be a helping to make a services export, too.
“So you’re creating the value, a U.S. person, a U.S. entity is creating the value and the consumer is abroad,” said McDaniel.
She said it makes sense that U.S. services exports are trending up. Advances in technology have made it easier to buy and sell services across borders.
There are also certain industries — like financial services and insurance — that the U.S .is known for.
“American banks and other financial services providers, including insurance companies, are pretty good at what they do, even though we might think that they have all sorts of problems,” said Cornell trade policy professor Eswar Prasad.
Prasad points out that banks in the U.S. are highly regulated. They’ve also got a lot of capital behind them. And not every country’s workforce knows as much about wealth management or accounting work-arounds.
“So we might have citizens in India, citizens in China and other countries looking to American firms to manage their money, provide insurance products and so on,” Prasad said.
This demand is one reason why the U.S. has a services surplus. That is, we export more services than we import.
Economist Christine McDaniel said there are downsides to exporting services, like a greater risk of intellectual property theft. But there’s one giant upside: more customers.
“You can really increase your market access and your revenues, help grow your company and expand here at home, as well,” she said.
Lighting designer Greg Guarnaccia would like to become an even bigger exporter. He’s added a partner in Costa Rica to help grow his international business. One thing that helps, he said, is lighting design is still a relatively young industry.
“It’s still hard to find lighting designers in many parts of the world, qualified lighting designers. People are looking for expertise,” Guarnaccia said.
And he said they’re coming to him to find it.
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