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August 30, 2014

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THE ECONOMY:

Rx for recovery: Boost exports

That includes foreign tourists spending here, think tank says

If Las Vegas hopes to recharge its sputtering economy, the city should increase exports to other countries by developing an international trade center where business deals “get done” and encouraging more consultants to set up shop in Southern Nevada.

Mark Muro and Robert Lang, co-directors of Brookings Mountain West, a collaboration of UNLV and the Brookings Institution in Washington, reached that conclusion based on “Export West,” a report released today by the think tank.

The report urges Las Vegas and the nine other largest cities in the Intermountain West to consider ways to increase exports by defining their strengths and potential foreign markets.

Those strategies, the report said, would be preferable to the “desperate corporate recruitment bids and California cherry-picking that Western metropolitan areas too often engage in ... After all, a homegrown export-related job is as good as a job from a relocated company and probably more sustainable.”

Brookings defines foreign exports as those involving manufactured goods and services that are purchased. Included are foreign tourists who stay at Las Vegas resorts to gamble or attend trade shows because they are converting their currency to U.S. dollars and spending them here.

Las Vegas could evolve into an international trade center by encouraging financial, management and other business experts to locate in the valley and work with industry representatives who attend trade shows in Southern Nevada, Muro said. Such consultants are popular with other countries, particularly those with emerging economies, he said.

“Las Vegas needs to diversify into other export-related activities outside of tourism and gaming,” Muro said. “Las Vegas has had a huge specialization in gaming and tourism as an export but there are concerns about those services as a focal point of your economy. There are questions about the prospects for consumption growth of those services both domestically and worldwide.”

Why the pressing need to increase foreign exports?

On a national level, Brookings points to President Barack Obama’s belief that increased exports could create jobs. Las Vegas and other Intermountain cities could benefit from exports to replace jobs lost by the downturn in the real estate market, the report said.

Some of what Brookings suggests is being pursued in Southern Nevada.

The Consumer Electronics Association, which produces the annual Consumer Electronics Show in Las Vegas, is talking with about a dozen resorts and other businesses to establish a World Trade Center Las Vegas, a fixed location where foreign businesspeople could meet.

“This would firmly establish Las Vegas as an international business hub,” said Jason Oxman, the association’s senior vice president of industry affairs.

The idea drew praise in “Export West.” Lang said it would be best to locate the trade center on the Strip and make it a place for business meetings and to show off the latest in electronics.

“You could turn it into a kind of World’s Fair exhibit,” Lang said. “There would be the serious side, the people who are involved in global trade. And then there would be the fun side for consumers.”

Foreigners represent up to 25 percent of the attendees at trade shows in town, something the Las Vegas Convention and Visitors Authority has cultivated by sponsoring trade missions overseas that allow show producers to meet with corporate executives from places such as Brazil, India and China. Those three nations were singled out by Brookings as places that are ripe for U.S. exports.

“Our itinerary is driven by where our trade show customers say we need to go,” said Chris Meyer, LVCVA’s vice president of sales.

There are some export barriers that Southern Nevada faces, though.

Las Vegas could probably attract increased participation by foreigners if the U.S. Commerce Department did more to promote this country’s trade show industry abroad, Meyer said. It also would help if the State Department issued visas of at least two years to foreign businesspeople so they would have the time to scout opportunities in the valley, he said. Part of the problem is that many business visas are for far shorter periods because of reciprocity agreements.

On the manufacturing side, Nevada Development Authority’s Somer Hollingsworth said the valley is well positioned to attract more alternative energy and plastics companies that have the potential to make global sales. He cited last week’s announcement that California company Amonix would open a solar power plant in North Las Vegas that will provide 278 jobs.

But he said American manufacturers find it tough to compete worldwide because of the relative high cost of producing their goods. To succeed globally, Hollingsworth said, “an American company would have to have an amazing product, and there would have to be huge demand.”

“Export West,” which used data from 2003 through 2008 — the period before the recession — provides a mixed picture on Las Vegas.

Led by its emphasis on tourism, Las Vegas in 2008 had the most unbalanced export economy among the 10 major Intermountain cities studied, with nearly 80 percent of those exports coming from services and only 20 percent coming from goods. The most balanced was Colorado Springs, Colo., which derived nearly 55 percent of its exports from goods and 45 percent from services.

That explains why Las Vegas was tops among the nation’s 100 largest cities with 6.2 percent of its gross metropolitan product — the amount of goods and services produced — devoted to service exports.

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