by Richard J. DeKaser and Jane Sneddon Little
November/December 1994

The recession of the early 1990s hit New England much harder than the nation. Presumably, thus, New England firms are highly motivated to seek rapidly growing markets wherever they may be--including overseas. During the 1990-91 downturn, real net exports cut the depth of the U.S. recession by half. Looking ahead, moreover, recent forecasts by the International Monetary Fund suggest that world growth will outpace U.S. growth in 1995. Despite New Englanders’ obvious incentive to explore burgeoning foreign markets, however, the best available data indicate that the region underperformed the nation in terms of export growth from 1987 to 1993.

This article explores the reasons for the region’s below-average merchandise export growth and concludes that it largely reflects the relative importance of the regional computer industry and its recent structural problems, not a pervasive "exporting problem." Also contributing are New England exporters’ traditional ties to markets in mature industrial countries, such as Atlantic Rim countries, which suffered severe recessions from 1990 to 1993. As the authors point out, however, merchandise exports represent only one route to foreign consumers. New Englanders are also reaching vibrant foreign markets, such as Asia or Latin America, through exports of services and through sales made by foreign affiliates of New England firms. The ongoing restructuring of the regional economy suggests that these alternative paths are likely to become increasingly important over time.

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