from Renewing America

Morning Brief: Export Potential of Services Overlooked

A construction site of China Construction Bank is seen in front of Bank of America Tower in Hong Kong. (Bobby Yip/Courtesy Reuters)

April 11, 2012

A construction site of China Construction Bank is seen in front of Bank of America Tower in Hong Kong. (Bobby Yip/Courtesy Reuters)
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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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Proposals to increase U.S. exports usually focus on manufacturing and ignore the U.S. competitive advantage in high-skilled services (NYT). While the WTO and other international trade agreements have reduced barriers and tariffs for goods, services are still in need of trade liberalization. The United States is by far the world’s largest services exporter, but reducing barriers in tradable services could double that total and add more than $800 billion in annual exports and three million new jobs.

The CFR Independent Task Force on U.S. Trade and Investment Policy recommended that the Obama administration and Congress focus on expanding U.S. services exports as part of a broader strategy that brings to more Americans the benefits of global engagement

Role of Ex-Im Bank in a Global Economy

The Harvard Business Review argues that the debate about reauthorizing the U.S. Export-Import Bank (Ex-Im) is often framed as a debate about the size and role of government and not Ex-Im’s role in growing exports. Lindsey Graham, the Republican senator from South Carolina, noted the importance of Ex-Im Bank in creating a more level global playing field when he said: “I wish we didn't need an Ex-Im Bank. But other countries have far more aggressive financing regimes in place. The United States cannot and should not unilaterally disarm." The Ex-Im Bank will hold its annual conference in Washington April 12-13, with former President Bill Clinton delivering the keynote speech.

CFR’s Ted Alden discusses the issues facing lawmakers as they consider Ex-Im reauthorization, including the increasingly aggressive actions of developing countries to finance their exports and Ex-Im’s efforts to match them.

International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.

Education and Human Capital

Should College be Free?

Michael Hiltzik of the Los Angeles Times argues that the University of California system should resume providing a free college education to Californians. It’s a striking proposal at a time when most state universities are raising tuition rates to compensate for dwindling government support. He argues that the $3 billion annual cost of eliminating tuition would be a better and more cost-effective long term investment in the Californian economy than other proposals, such as the $11 billion cost of eliminating the state capital gains tax.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.


Measuring Startup Ecosystems

Techcrunch delves into a data-driven comparative analysis of the world’s leading startup hubs, Silicon Valley, New York City, and London. Last year, the Startup Genome project started collecting data from thousands of startups to quantify the ecosystems that support them. Among the insights: Silicon Valley startups create more jobs than firms in New York City (11 percent more) and London (38 percent more), subscriptions are the most popular revenue stream in all cities, and Silicon Valley firms raise two to three times more funding in the first three development stages.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

Debt and Deficits

Tax Expenditures approach $1.3 trillion

The Tax Policy Center discusses the recently released Treasury estimates of the cost of tax expenditures—deductions that reduce individual and corporate taxes. Programs such as the mortgage tax deduction, child credit, and the deductibility of employer-provided health insurance are expected to cost the federal government almost $1.3 trillion in 2012, and $1.8 trillion in 2017.

As the United States continues to run high budget deficits, politicians debate different plans to reduce government costs and to raise revenue. This CFR Backgrounder by Jonathan Masters outlines the competing policy paths on federal fiscal reform and the global consequences for failing to bring down U.S. debt.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

Steven J. Markovich holds an MBA from the University of Chicago’s Booth School of Business.

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