A panel was held recently on Phoenix’s position in the global community and how the educational, political systems and commercial markets are shaping the global future of Phoenix. Dr. John Mathis, an economist from the Thunderbird School of Global Management will discuss Phoenix’s role in global markets.
Ted Simons: Arizona had $15.5 billion in exports last year with Mexico as our top trading partner, followed by Canada and China. There were $8 billion in exports from the valley alone. Business and trade leaders got together last week to discuss local exports at an international state-of-the-state luncheon hosted by the Phoenix Committee on Foreign Relations. Here to talk more about Arizona imports and exports is Dr. John Mathis, an economist from Thunderbird School of Global Management in Glendale. Good to have you here. Thanks for joining us.
Dr John Mathis: Oh, thank you.
Ted Simons: Where does Arizona rate in terms of international competitiveness?
Dr John Mathis: Pretty close to a weak position. We don't really stand out in anything. Specifically. Maybe aircraft, aircraft parts and things like that, in terms of the largest single sector on the export horizon.
Ted Simons: Were we at one time in better shape?
Dr John Mathis: The numbers showed us to be a little bit stronger five, six years ago. But not recently.
Ted Simons: Why the declining share?
Dr John Mathis: Partly it's just economic activity to those that we export to is declining and there's no demand for any products let alone the products from Arizona. And you know, 22% of our exports plus go to Europe and more goes to Asia, but Europe is pretty sick right now and Asia slowing down from the Chinese very rapid 10%, 11%, 12% growth rate and as world slows down, people have less income to spend on buying things overseas.
Ted Simons: As far as Arizona's image on the international stage what are you seeing?
Dr John Mathis: I think there you have to switch from trade, people buy products, not the image so much, to the financial side of the picture and you have to ask yourself, "What do foreigners think of Arizona? Do they invest in Arizona? 2:02 Do we receive What do they think of Arizona? The amounts are insignificant. We don't receive a lot. So they don't think of Arizona as a place to invest. We just talked about $15.5 billion of Arizona exports and then you go to New York and you have $50 billion or the second, third, fourth, in the $40 billions, so we're way down the value chain internationally.
Ted Simons: Why are they not thinking of us in terms of venture capital or financing of any sort?
Dr John Mathis: Not much of it happens here. It's not a place where there's a huge marketplace. The population -- compare us to California or the other centers of new venture entrepreneurship and Phoenix is just not there.
Ted Simons: Is Phoenix not there compared to other areas of the same population, of the same economic activity or kind of dragging up the rear here?
Dr John Mathis: We're in the middle of the desert, in case you haven't noticed.
Ted Simons: Yeah.
Dr John Mathis: As opposed to major industrial centers surrounded by a lot of universities and think tanks and I come from a university so I have to be careful here. I think ASU has done a wonderful job improving the quality of the education. So has the University of Arizona. The awards and grants they've won. Thunderbird does a good job. The University of Phoenix, even in terms of representing as a source of education, knowledge creation, that long run is going to help us but it takes time to get there and recognize that. As compared to, you know, a Boston corridor, Philadelphia. Here you have old established multiple, many more educational institutions and we're not competing there yet.
Ted Simons: How do we compete there yet? How do we best present ourselves to the rest of the world?
Dr John Mathis: One of the ways we're projecting ourselves and it's kind of a hidden resource. We have an awful lot of consultants. Some that work for the universities I mentioned, but a lot of others have located here that do consulting for international organizations. I meet so many of them on a plane that I haven't seen since I left Washington or New York. We have a great airport and you can go directly from here to London and then go anyplace in the world and what better place to live but here? So that consulting revenue, consulting advice, that's a huge potential for growth and knowledge, again, of Arizona that can be perpetuated.
Ted Simons: What about other goals? Other Arizona goals, Phoenix metropolitan goals, what are you seeing?
Dr John Mathis: If you look at the products we export, I think we're on the right path, but not doing enough and the products are about 70% manufactured goods. Outside of aircraft, you know, there's a few specialties, optics, which in Tucson is very good. Here, we, ASU does a lot of spacewalk -- space machine, and we produce the machines that produce wafers for computers. I men, that's huge. There's only one other company that does that and that's in Japan. So we have some small areas of expertise, just not big enough, that don't have enough momentum, you know, to carry Arizona into the international arena.
Ted Simons: Much debate at the state level regarding incentives, tax breaks or be they other boosts for those who might otherwise change this scenario. Does that make sense to you? Are those goals the state should pursue knowing that right now the budget itself is just horrible?
Dr John Mathis: Timing is everything. I'm sure you've heard that. Right now is not the time to go out and try to sell people things when Europe is in disarray, Asia is kind of slowing down. Our two biggest markets are not hot and hungry for products. So it's a difficult sell. You're asking yourself how much money do you want to spend to sell to someone who doesn't have the income to buy. Timing is everything. I think a year from now, two years from now, the market will be improving more. And that may be a better time to make a full blown effort.
Ted Simons: When that market does improve, I mentioned image before, there are some who think that immigration laws and the "Fast and Furious" fiasco, by way of the U.S. government, that these things are painting Arizona as an unwelcomed state, as a hostile state, to certain foreign investment, especially with Latin America.
Dr John Mathis: I'm glad you said that and I didn't, because it's the obvious bad image that Arizona continues to perpetuate. I mean, you can't believe what you see in foreign newspapers that's written by what they focus on in Arizona. It's not - it's high -- it's not high level of education, expertise in certain areas. It's the flash and negative stuff that sends out a bad message. We've got a huge job to change that.
Ted Simons: And that's a job that -- when you talk about all the positive things, is the state doing a good enough job of getting that information out there?
Dr John Mathis: Um, it's a tough P.R. challenge to overcome that much negative news. I don't think it's going to be easy and it's not going to happen overnight. And you know, you ask why -- why have things slowed down? Well, I think we were on a better roll, you know, 10 years ago in terms of marketing Arizona than today. I think we've confused the marketplace as to is this the Wild West or are we more sophisticated?
Ted Simons: With that in mind, is there a model that Arizona can use? Another state, another region? Is someone out there doing something that we could look at and say, we can do that. We can adopt those policies and take it from there.
Dr John Mathis: I go back to two things. One, we have a lot of intelligent people who do consulting work. That makes this a favorite place for conferences and conventions and I think that's one thing that should be marketed. Get people here so they can see for themselves what we're like and get our university professor, we have fine wonderful universities, engaged in speaking at these conferences. The second thing is the -- all of the consultants that are going out, already convince them to represent Arizona better.
Ted Simons: All right. Good to have you here. Thanks for joining us. We appreciate it.
Dr John Mathis: Thank you.
Dr. John Mathis : Economist from The Thunderbird School of Global Management
