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Dramatic Growth in Massachusetts Exports to Russia
21 February 2008
Dramatic Growth in Massachusetts Exports to Russia

Dramatic Growth in Massachusetts Exports to Russia
Daniel Satinsky, President, B.E.A. Associates
www.bea-associates.com

Massachusetts Export to RussiaAn examination of the export statistics from Massachusetts to Russia in the period between 2005 and 2007 shows a dramatic increase in volume. In 2005, the total annual value of export sales was approximately sixty-five million dollars. In 2006, this increased by seventy-eight percent to a total of one hundred and seventeen million dollars. Then in 2007, there was another forty-four percent increase to a total of one hundred and sixty-eight million dollars. Overall Russia was in twenty-fourth place on the list of foreign export destinations for Massachusetts. Looking at the list of U.S. states exporting to Russia, Massachusetts stood in fourteenth place.

While the increase in export trade is dramatic from the point of view of the rate of growth, there is clearly room for much more vigorous trade in those industries that compose the core of the Massachusetts high tech, innovation economy. The types of goods currently making up a large amount of Massachusetts exports to Russia are not from these core sectors. While first place in the overall list was industrial machinery (including computers), second place was motor vehicles and tractor trailer cabs, sixth place was frozen chicken and eleventh place was aircraft, spacecraft and parts.

Eighty percent of Massachusetts exports to Russia come from the top four categories of commodities – industrial machinery, including computers; vehicles and parts; electric machinery, sound equipment, TV equipment; and optic, photo, medical or surgical instruments. Most likely the exports in categories two through four represent resale of goods produced elsewhere, but with the deal carried out by a Massachusetts company.

Given the relatively low total of exports to Russia, the volume can be dramatically impacted by several large individual sales of goods that may or may not continue into the years to come. For instance, there was a sale of over seven million dollars in frozen chicken in 2007, but no sales of chicken in 2005 and only sixty thousand dollars of sales of chicken in 2006. Similarly, there were large sales of semiconductor material for solid-state non-volatile storage, road tractors for semi-trailers, aircraft parts and electronic circuit boards that appear for the first time in 2007.

In the core areas of the Massachusetts high tech economy, the strongest representation, after industrial machinery was medical equipment in fourth place and pharmaceutical products in fifteenth place.

A review of the trend of accelerating volumes of exports and the weak representation of the core sectors of the economy in this export trade can lead to a number of conclusions. It could be that the increase in export volumes is ephemeral and built on a series of one-time sales that will not repeat. It could also be that there remains a large up-side for the export trade to increase if companies in the core sectors begin to focus on competing in the Russian market.

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