2nd Quarter 2014

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Estimating (continued)

by Steven G. Livingston | 1 | 2 | 3 | 4 | 5 | 6

This means between roughly $20 million and $36 million of the port states' combined reported $199 million of exports are inaccurately allocated to them. (The forging and stamping industry is not a particularly large export industry.) If we reallocate the portion of that amount that corresponds to Tennessee's percentage of inland state forging and stamping exports, the increase is considerable. Tennessee is reported to have had forging and stamping exports of $7,117,730 in 2011. If we presume port states to be over-allocated by 10 to 20%, the state's estimated exports in this industry rise to between $7,459,100 and $7,709,298. That latter figure amounts to an 8% increase in state exports.

This is a Tennessee industry that already showed as a strong exporter. Attempting to account for that bias raises its export ratio from 1.18 to within a range of 1.24 to 1.28. This suggests forging and stamping is an industry in which Tennessee operations are significantly more export focused than the national average.

Let's do the same analysis for the motor vehicle parts industry. As is typical, over two-thirds of America's motor vehicle parts exports go through ports in just five states. Those states are reported to have half of all the industry's U.S. exports. These states thus "over-export" by a factor of 1.71. Again we'll project as more realistic an export ratio between 110%(1.1) and 120%(1.2).

Our final table includes the other two industries we investigated. The major lesson is that plausible estimations to account for port state bias would substantially raise the amount of exports credited to Tennessee. Tennessee industries are more export focused than simple reported state export figures suggest.

That said, the results for the basic chemical industry remind us to treat even this conclusion carefully. This is an industry dominated by large firms (for example Tennessee's Eastman Chemical) that for the most part perform their own export documentation. As a result, the state is probably being credited correctly for its exports. There is little port state bias in this industry (a ratio of 1.05), which means estimates that assume such bias are going to inaccurately reduce the state's export figures. So while the broader story is that a (relatively!) simple method can more accurately estimate state exports for many industries, we really have to know the features of the industry and the firms within it before we employ this method with abandon.

ACCOUNTING FOR PORT STATE BIAS IN TENNESSEE EXPORTS

Year 2011.  $ thousands.  1 2 3 4 5 6 7
Forging and Stamping 69% 1.34 $7,118 $7,459 $7,709 1.280 1.180
Auto Parts 69% 1.71 $2,790,067 $3,636,585 $3,802,200 0.977 0.717
Home Appliances 67% 1.88 $261,175 $301,502 $307,419 0.426 0.363
Basic Chemicals 65% 1.05 $2,136,570 $1,881,286 $2,050,843 0.939 0.979

1. Percent of U.S. exports through top five port states

2. Top five port states' ratio of exports/state value of shipments

3. Reported Tennessee state exports

4. Estimated Tennessee exports if port state exports were 120% of their expected exports

5. Estimated Tennessee exports if port state exports were 100% of their expected exports

6. Tennessee ratio of exports/state value of shipments based on reported exports

7. Tennessee ratio of exports/state value of shipments based on column 5