I recently was contacted by the Editor of the Maryland Business Gazette and asked to comment on whether I thought that having Maryland’s Governor O’Malley lead a business development and trade promotion mission to Asia justified the use of taxpayers’ money since most of the deals signed on that mission were pre-negotiated.
My specific comments appear in the article below, but the broader issue of marquee leadership of trade missions is a rather interesting one.
Although it is correct that most of the trade missions, or for that matter other political and economic development visits by top officials, usually involve a significant element of political gamesmanship and culminate in signing of highly publicized prepackaged and pre-negotiated agreements, these agreements and visits serve an important purpose. Such missions also send an unmistakable message of a country’s or state’s commitment to the proposed cause or project. In many countries a size of the visiting delegation is usually perceived as an added indicator of the visitors’ commitment and sign of serious intent. As a response, having sizable delegations led by top officials, usually causes the countries visited by such officials to put their own top-level counter-parties across the negotiating table and manage the initiative more effectively from the opposite side. These missions also serve as press and media magnets, which makes it easier to spread the message among the target audiences. They also define and shape trade policy and help set direction for the cooperating Government agencies and NGOs involved in the economic development.
Where such missions can breakdown is when they lack follow through. A stand alone mission undertaken for political public relations purposes will not only be a waste of taxpayers’ funds, but is also likely to have a negative effect on both host government relations and on the local constituents. It will erode goodwill and plant seeds of skepticism and mistrust, as well as questions of fiscal mismanagement. Thus it is essential that any trade development mission be planned as part of a comprehensive and sustainable follow through effort and long-term cooperation, and not just simply as a campaign act or a political check mark.
Maryland is a great example of a state focused on developing its international business and Governor O’Malley’s recent trade mission is an effective use of his stature to enhance that state’s trade and direct investment development efforts. As always I hope that you enjoy the article below and welcome your comments.
GOP questions cost, but experts say it was money well spent
by Lindsey Robbins, Staff Writer, Maryland Business Gazette, June 17, 2011
While Gov. Martin O’Malley’s recent trip showcased deals between Maryland companies and Asian businesses and governments, some question whether its expense and extent were justified.
“Could this have been accomplished with much less cost?” asked House Minority Leader Anthony J. O’Donnell (R-Dist. 29C) of Lusby.
In a report, O’Malley (D) refers to global competition, rather than local competition, as the “true competition” that states face in this economy.
“With many of Maryland’s top business leaders and educators among our delegation, we sent a strong message to companies in China, Korea and Vietnam that Maryland is the gateway to doing business in the U.S., particularly in the life sciences and high tech industries,” he said in a statement. “… I am confident that this mission will continue to open doors for new investments and help Maryland businesses navigate untapped opportunities to provide goods and services to some of the world’s fastest growing economies.”
But the Maryland Business for Responsive Government says it is concerned with a shifting focus from in-state business concerns to global ones.The group points to Moody’s Analytics ranking Maryland 32nd in the nation when it comes to economic outlook and Chief Executive Magazine ranking Maryland 37th when it comes to doing business.
“There is general agreement on the need for each state to participate in the global economy, and the Governor’s Asian economic development trip is a step in that direction,” Kimberly M. Burns, president of the group, wrote in a statement. “More importantly, with a special [legislative] session looming in the Fall is the need for fiscal responsibility, holding the line on taxes and improving our business climate here at home so we can compete both with neighboring states and in the global economy.”
O’Donnell and Minority Whip Jeannie Haddaway-Riccio (R-Dist. 37B) of Newcomb also expressed concerns through a letter to O’Malley.
“This was a very large delegation. We want to understand the cost,” O’Donnell said. ”At a time when Marylanders are struggling to pay their bills, we want to know the actual cost of the trip, and we’ve asked for that to be chronicled.”
The letter mentions the governor’s office reporting the trip cost about $100,000. State officials have said they are working to come up with a total cost. At his news conference Tuesday, O’Malley said he did not have the cost.
O’Donnell’s letter requests an accounting for the individual costs for the 27 government-related staff, as well as unnamed staff members and the security detail. Although O’Donnell said he expects the private-sector executives paid their own way, the letter also calls for reporting any taxpayer dollars used to cover them.
Experts say O’Malley’s presence was instrumental in fostering deals, even if some were prearranged.
“Just because the deals may be cut before doesn’t mean he’s not cutting more deals while there,” said Peter Morici, a business professor at the University of Maryland, College Park.
“There’s time and effort that goes into attracting these businesses,” said Morici, who acknowledged that he is often openly critical of lavish government spending, but O’Malley’s trip doesn’t fall into that category. “The cost is really just airfare.”
He said Asian government and business officials typically place a great deal lot of importance on a government presence went it comes to economic development, so a governor’s presence has an impact.
For example, BlueWing Environmental Solutions & Technologies’ deal with Vietnam Natural Resources and Environmental Corp. was facilitated by O’Malley’s support, said Kevin E. Hedge, CEO of the Ellicott City company.
Most business deals in Vietnam go through its government, said Peter Gourlay, president and founder of the Maryland-Asia Environmental Partnership.
“Having the [Vietnamese] government sign an agreement is huge,” he said. “Vietnam is one of the most vulnerable [nations] to climate and environmental issues, and that directly impacts their exports. … So the government is especially interested in BlueWing’s technology.”
Lin Hwang of J&R Seafood agreed that the governor’s presence lends credibility.
“Most emerging countries appreciate it very much,” Alexander M. Gordin said of a governor’s presence on a trade mission. Gordin is a trustee of the Princeton Council on World Affairs and international trade expert with the Broad Street Capital Group in New York.
The trade mission shortened Planned Systems International’s contract cycle by six months, saving the Columbia company thousands of dollars, CEO Terry Lin said. He said such contract negotiations can be especially difficult, so having a significant presence such as O’Malley’s was helpful.
Gordin said the governor’s presence sends a message that the U.S. sees global trade as especially important. He added that having the governor actually addressing the foreign groups also helps differentiate the state within the U.S. and helps other countries understand they are working with Maryland specifically.
“Maryland is in a great position to take advantage of this international post-recession-world,” Gordin said. “If the mission is followed through with actual activity, it will be very useful.”
He said such missions build long-term relationships and that nothing will ever replace face-to-face discussions when it comes to commerce.
“We can’t stop trying to attract businesses to Maryland just because things are tight,” Morici said. “We need to do this to compete. Other states are also attracting foreign investment.”
Alexander Gordin
Valerie Antoinette
Fluent In Foreign Business 