INDEPENDENCE ISSUE PAPER D~ No. 1-88 Independence Institute * 14142 Denver West Parkway #101 * Golden, CO 80401 + (303) 279-6536 COLORADO PACIFIC RIM TASK FORCE Focusing Trade, Investment, and Tourism Opportunities with Private Sector Leadership Mission Statement and Participants To maintain Colorado's prosperity in the 1990s, business and political leaders must adopt a wider horizon and acquire a new language. The state is in a race to learn to "speak Pacific Rim. The Independence Institute, Colorado's leading public policy center recently published an analysis of the situation by former State Rep. Bill Artist, one of the legislature's most effective advocates for international trade before he stepped down in 1986. Artist's paper, Far East Trade and Tourism: Is Colorado Serious? (Independence Issue Paper No. 15-87) has now led to formation of an action group to follow up. Here is the situation: ™ State Must Enter World Markets Colorado during many past decades enjoyed a stable, slowly growing economy sus- tained by the state's natural beauty, its agricultural assets, its mineral extraction industries, and a large federal payroll. The state actually derived a measure of economic strength from its relative geo- graphic and political isolation from the rest of the country and the world. It was spared the disruptive impact of giant corporations swooping into other locales with huge development budgets, hiring workers, then withdrawing when market conditions deteriorated, leaving local communities at loss. But the isolation ended with a series of events in recent years, including the oi] boon of the 1970s. Colorado's economic destiny became far more closely inter- linked with the global order. Today with the ofl boom over, there continues to be a nostalgic inclination (represented in the views and following, for instance, of former Governor Lamm) to maintain Colorado's historic insularity. An example currently in the news is the quixotic, state-funded Economic Renewal Program, which encourages Colorado towns and cities to become autarkic subsistence communities that could effec- tively opt out of the interdependent world economy. The simple fact, however, 1s that Colorado has no choice but to compete vigor- ously in both the national and international arena. The only alternative is a steady decline in living standards and a growing dependency on "cash-cropping" through low- margin domestic tourism. Note: The Independence Issue Papers are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.Why the Pacific Rim? The cultivation of international trade relationships for Colorado, particularly in the Far East, now makes compelling sense for the following reasons: 1) With their booming manufacturing-based economies, the nations of the Pacific Rim (i.e., Japan and the so-called "Little Dragons" which include Taiwan, Korea, Hong Kong, Singapore, Malaysia) are an obvious source of economic stimulus for regions with virtually flat growth curves, such as the Rocky Mountain West. There is enormous potential for major capital investment from that part of the world, to spark economic expansion here. The historical tendency of high-saving cultures (e.g., America in the 19th century and the Pacific Rim countries at present) to quickly develop into a natural market for consumer durables imported from abroad also brightens the long- range picture for exports. 2) Colorado suffers from a comparative disadvantage in the competition among states for the small number of domestic industrial projects. It also ranks low in its ability to attract large amounts of venture money for development from East and West Coast financial centers. However, it has a significant advantage in leading the race to open markets and trigger capital movements in the Far East, particularly among the Little Dragons. Colorado's initiative in becoming the first state to open a trade office in Taipei is a sign of such forward motion, The Governor's frequent travels to the Pacific Rim also bode well for this prospect. 3) Colorado's entrepreneurial climate, together with the relatively light penetration here by major American corporations, is ideally suited for the development of a distinctive and unrivalled trade relationship with Pacific Rim nations, particu- larly the upcoming challengers to Japan. The absence of a strong Japanese presence in Colorado is actually a plus for encouraging ties with Korea and Taiwan. Colorado should move decisively to secure this advantage. Once such an advance has been established, the Japanese will probably take far more of an interest in the state, Needed: Strategic Plan and Private Sector Followup To seize that comparative advantage, Colorado needs a strategic plan for Far East trade development. This must include effective mechanisms to follow up Governor Romer's initial goodwill trips with specific trade information and assistance for local firms wanting to do business in that part of the world. The state government may help in providing these, but it is unlikely to do so with much boldness or imagin~ation; bureaucracies are not that way. In any case, the government should not be pulling the train for the business community. Serious trade development should be the responsibility of the private sector. The Independence Institute, experienced as an advocate for Colorado's economic growth and committed to private sector solutions, has formed the Colorado Pacific Rim Task Force to help focus the policy process and accelerate the deal-making. The Colorado Pacific Rim Task Force is comprised of individuals from outside the government, experienced in international trade and public policy. Membership is open The task force meets about once a sionth to pursue the to any qualified participant. FolTowing agenda * Amplify the recommendations of Independence Issue Paper No. 15-87 through spring 1988 publication of a Colorado Pacific Rim strategic plan (another in the Indepen- dence Issue Paper series) that inventories the state's economic advantages and prioritizes the trade and tourism opportunities over the next ten years. * Recommendations for developing an information and communications consortium for Promoting, steering, and monitoring trade dealings. * Recommendations for maximizing the benefit to Colorado business from trade mis- sions, both those heading to the Far East from here and those inbound here from Asia. * Evaluating and critiquing, when necessary, the efforts of state government in its involvement with foreign trade initiatives. Task Force Chairmen and Participants John Andrews is president of the Independence Institute. Carl Raschke is an economic development consultant, a DU professor, and an Independence senior fellow. They drafted this mission statement and co-chair the task force. A roster of participants is attached. For more details on CPRTF, write or call the Independence office. Issue Date: January 20, 1988