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Around the World With Arkansas Trade (Greg Kaza Commentary)

2 min read

Piquing the curious about the remarkable story of Arkansas international trade can start with a humble road map.

It’s a story that illustrates the importance of aviation and advanced manufacturing to Arkansas’ economy.

In 2022, Arkansas businesses’ exports totaled $5.9 billion, according to the latest Arkansas Economic Development Commission report. The basis of international commerce is British economist David Ricardo’s (1772-1823) theory of comparative advantage, which explains the benefits of trade. Efficiency and specialization are key to his theory.

One way to illustrate Arkansas trade with the world is via the state’s geography. Arkansas is blessed with a number of communities named for foreign nations and capitals. This method is also helpful for teaching students to think about trade.

To illustrate, consider Arkansas’ top trading partners in Europe. England (Lonoke County) is part of the United Kingdom, as is Scotland (Van Buren County). London (Pope County) is the U.K. capital. Belfast (Grant County) is a major city. Paris (Logan County) is France’s capital. Stuttgart (Arkansas County) is a German city.

The relevance of geography to international trade? The United Kingdom was Arkansas’ fourth-largest export market in 2022, the AEDC report notes.

Exports to the U.K. totaled $245.6 million, trailing only Canada ($1.4 billion), Mexico ($1 billion) and China ($375.3 million). France was Arkansas’ sixth-largest export market ($184.7 million) while Germany ranked 16th ($72.1 million) among exports.

The Ricardian dimension? Arkansas enjoys a comparative advantage in the production of aviation-related products, the top export by dollar amount. Cotton and poultry are highly visible Arkansas exports. Less well-known is that nuclear reactors, boilers and related machinery are Arkansas’ second-largest export.

Aircraft, spacecraft and parts represented 15% of Arkansas exports totaling $891 million in 2022. The aviation sector led exports to the United Kingdom ($138.5 million), France ($160.2 million) and Germany ($1.4 million).

Other European nations sharing geographical names as destinations for Arkansas aviation exports included Denmark (White County) and Greenland (Washington County), Ireland (Dublin, Logan County), Italy (Rome, Clark County) and Greece (Athens, Howard County).

Non-European nations also share Arkansas geographical references. Consider nuclear machinery, which last year represented 9% of Arkansas exports, totaling $514 million.

Goods in this sector were exported to Egypt (Craighead County), the Philippines (Manila, Mississippi County), Israel (Jerusalem, Conway County) and the Congo (Saline County).

The dynamic nature of Arkansas’ economy is illustrated by the importance of its two largest exports: aviation and nuclear machinery products.

Businesses and entrepreneurs operating in these markets already understand their importance.

It’s important that students learn about international trade’s role in Arkansas’ economy.

With imagination, it could be the key to their future after graduation from a high school, trade school, college or university.

It starts with a humble road map.

Economist Greg Kaza is executive director of the Arkansas Policy Foundation, a nonprofit think tank founded in 1995 in Little Rock.
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