All the Right Stuff
Four ways Alaska is primed for export success
Alaska is in something of a “sweet spot” these days as we benefit from what I call the “Three Rights” of export success: We are in the Right Place, at the Right Time, with the Right Commodities.
Alaska has always been blessed by its geographic location. Our strategic location on the Pacific Rim has placed us along the “great circle” route for marine shipping between Asia and North America.
Location has also enabled Anchorage to become one of the most important air cargo hubs in the world, poised, as it is, equidistance between Asia, Europe and North America. Add to this, we are neighbors on the Pacific Rim with some of the world’s fastest growing economies and most rapidly growing populations. All of this puts us at the Right Place on the map.
Political and economic transformation during the past several decades has resulted in formerly centrally planned economies becoming more or less free market in nature, in some cases, now allowing private ownership of property, companies and resources. With this has come the establishment of commercial laws and recourse. Some countries are now permitting, if not encouraging, foreign direct investment in their resources and industries. At the same time, major Asian countries with huge currency reserves are scouring the world’s natural resource jurisdictions to secure vital supplies and, increasingly, to also invest in the projects that produce these supplies.
Economic liberalization and modernization has led to the hundreds of millions of people migrating from the rural areas of their countries to the major cities, attracted by jobs and other opportunities to raise their standard of living. Consider China and India, two Asian giants who are leading the wave of urban expansion: According to McKinsey and Company, by 2025, China will add 400 million people to its urban population and India will see 215 million new residents to its cities. This mass movement of people from the countryside to the cities is unprecedented. The same report notes that never before in history have two of the largest nations (in terms of population) urbanized at the same time, and at such a rapid pace.
These developments have lifted many people out of poverty and, in the process, created billions of new consumers. Brookings Institution reports that between 2005 and 2010, sustained economic growth in emerging markets around the world has enabled nearly half a billion people to rise from poverty levels. They note that never before have so many people been lifted out of poverty in such a brief period of time. The simultaneous rural to urban migration, coupled with continuing economic growth and rising standards of living, is helping to drive staggering demand for the natural resources that Alaska sells. This puts Alaska at the Right Time in history.
Helping Develop World Economies
Home to world-class reserves of natural resources, including energy, minerals, metals, forest products and seafood, Alaska has what so much of the world needs to fuel their economic expansion and to feed their growing populations. What Alaska has to offer the world are what I consider the building blocks of economic development: energy to generate power, minerals and metals for industrial production, forest products for construction and manufacturing, seafood to provide sustenance to people. In other words, we are providing the necessities for modern life, rather than the latest technological gadget. So, we are selling the Right Commodities.
These “Three Rights” help to explain the strength and growth of Alaska’s exports to overseas markets. In 2011, Alaska exports reached $5.2 billion, a new all-time high, coming off the previous record of $4.2 billion set in 2010.
Looking to the future, geography may again prove to be a blessing for Alaska. I’m referring now to the commercial development of the Arctic. As America’s Arctic state, we are uniquely positioned to benefit from opportunities that will arise from increased shipping along the Northern Sea Route as well as the development of roads, railroads and ports that will enable heretofore “stranded” resources to be developed and transported from source to port to customer in an efficient manner.
These were some of the ideas presented and discussed at the first Arctic Ambitions conference in Anchorage last May. The event was co-organized by World Trade Center Alaska and the Institute of the North. Shipping companies from Norway, Finland and Russia made presentations having to do with current and future transportation opportunities along the Northern Sea Route. They talked about significantly reduced transit times and improved access to otherwise isolated locations.
We also heard commercial perspectives from government officials, including representatives from Alaska, Canada and Russia. The conference was well attended, and there was active dialogue between speakers and attendees. While tempered with the understanding that commercial development of the Arctic will certainly not occur overnight, there was clearly a sense of excitement about the possibilities and the future outlook.
It may turn out then that Alaska will have not three but four “Rights” that drive our economic development and export growth. The ability to access our treasure trove of natural resources, and move them from here to customers around the world, will be further enhanced by shipping routes, traffic and infrastructure resulting from development in the Arctic. So, we may need to add the fourth Right: we (and now the world) are heading North, the Right Direction!
Greg Wolf is the Executive Director for World Trade Center Alaska.