America’s Economic Opportunity in a World of Services

Technology and networks are lowering barriers to markets worldwide, and the U.S. has a growing jobs problem. As global growth shifts towards developing countries and cities, how can we most benefit? We could be on the threshold of a new era of data-driven progress, but we need a new focus on exports, especially for services, which accounts for the lion’s share of the American economy. What skills does the U.S. need to develop? Can small and medium-sized companies take advantage of expanding access and transparency in the global marketplace? What incentives and policies will enable these global opportunities? Read excerpts from the discussion below, or download the full transcript.
Baird: You know, we all appreciate, I think, that the central challenge that we face as a country is how to revitalize the economy. And many of us, probably most of the people in this room, feel that technology offers great promise in contributing to that, but the more difficult challenge is how do we do that in a way that broadly benefits Americans — it includes people who aren't at the top economically or don't have advanced degrees.
We are today, in America, part of a world where GDP growth is faster outside our own borders, where China, India, and Brazil together are in excess of 20 percent of global GDP.
And so we need to understand how we might expand our economic growth at home in this environment of global GDP growth. Is there a way that we can reverse the pipe, if you will, and instead of exporting jobs through outsourcing, is it possible for us to export services that will create jobs here at home?
Jensen: This is really skill-intensive stuff, and because the U.S. is still a skill-abundant place, we have comparative advantage in these activities. We run a trade surplus, a persistent trade surplus, in services exports. Yet if you look at service businesses, they are far less globally engaged than manufacturing firms. What's the problem?  Well, I think policy impediments are a big part of it. The BRICs that Zoë mentioned where there's a lot of growth, they have significantly higher trade barriers to services, by some estimates, six, seven times the barriers that the U.S. imposes. So I think that that's where there's a big opportunity to export U.S. services to these fast-growing economies.
There's a huge infrastructure boom under way. By some estimates $40 trillion will be spent over the next two decades, most of that in the BRICs. You know, think about the water, sewer, highways, airports, harbors, commercial/residential real estate—going to require an Army of architects, engineers, project managers, financiers, insurers, all the kinds of tradable services where U.S. businesses have comparative advantage.
Baird: With the development of technologies from the Internet, to cloud computing, to the kinds of things that many of you were doing, a lot of the jobs to provide these services can be performed in the U.S.
Sapiro: Services are about 70 percent of our GDP and support about three out of four jobs in America today. Services are also a critical component of the global economy. I think of services as the gears and the grease in a well-oiled machine. So ICT services, for example, critical. Financial services, banking, especially. Energy services, logistics, delivery, transportation—these are all absolutely essential for the growth of the global economy and the kind of supply chains that we have seen emerging.
We are the largest services exporter in the world. So I think there is much to be proud of here. At the same time we all feel that there's more we can do. And so we want to see just how services can become more competitive and expand internationally so that we can meet the goal of doubling all of our exports by the end of 2014, which isn't so far off. It's a five-year plan. And also creating 2 million additional jobs.
Capellas: While I think the export service is a critical component, one of the first questions we almost want to ask ourselves is why in the world do we have a trade deficit to start with? Here's a country with unbelievable natural resources, a trained workforce. So if I read the numbers, 2011 we had a $560 billion trade deficit, of which $350 billion was energy, and we had a $200 billion surplus in services. And so why I'm incredibly optimistic right now is that I think we have the potential over the next 5 to 10 years—under which technology is going to be a critical component—to actually eliminate the entire trade deficit.
What the U.S. does so well is it thinks about it entirely differently. I no longer know what a service is or a product is because the service is embedded in the product.
The U.S. way of thinking about things is we tend to look and we say there is a market need. We do market analysis. We then understand that. We build a physical product. We drive it to its lowest components, and sometimes that becomes commoditized. But what the real value creation is, we then say, what is the customer experience? We wrap services around it. We then will be able to do global distribution, and we have this wonderful thing called social networking which then allows us to get a closed-loop feedback system. Nowhere in the world do people innovate in this method.
I think if we set a national agenda not just to export services, but to say, you know, we should eliminate the trade deficit, we use technology in practical applications and we change the game of not just product and services, but how do you deliver an end-to-end customer service—I don't think anybody can do that.