Sustained growth in the world’s most innovative economy
The United States is the world's largest economy accounting for over a fifth of global GDP, is home to more than 320 million people and is the global hotspot for innovation
While the global financial crisis hit economies around the world, the US economy has bounced back better than most, recording over 26 quarters of uninterrupted economic-growth. Interest rates remain at near-record lows, wage growth is at its highest since 2009 and investor confidence continues to climb.
Already a world leader, the US economy is rapidly becoming ever more sophisticated. Since 1980 the advanced industries sector has grown at over 5.4 per cent per annum, outpacing overall GDP growth and adding over 4.4 million jobs in tech hot-spots from Boston to Austin to San Francisco. The services sector continues to grow and now accounts for over 80 per cent of the economy, with opportunities for innovative Australian service providers across the sector, including financial services, healthcare and tourism.
The size, strength and sophistication of the US market have helped to fuel its thriving innovation sector, which by many measures is world-leading. Total US R&D spend of $433 billion accounts for almost half of the OECD total of $1.07 trillion. Its venture capital market is huge, with over seven times more capital available per person compared with Australia. The US is home to just under half of the world's internet-based firms, it hosts 63 of the world's top 200 universities and has the greatest concentration of Fortune 500 companies of any country on earth.
Seizing the Opportunity
Australian companies are uniquely positioned to do business in this lucrative market. Australia is one of just 20 countries to have a free trade agreement with the US, providing duty free access to 97 per cent of all Australian exports. Under the E3 Visa, Australian professionals and their spouses can live and work in the US indefinitely if sponsored by a US business, a privilege accorded to no other country. And with the conclusion of negotiations of the Trans-Pacific Partnership Agreement, the prospects for Australian business in the US are set to improve even further.
Many businesses are already seizing the opportunity. Australian exports to the United States grew by 20 per cent last financial year. In contrast, Australia's exports into China, Japan and Korea combined fell 13 per cent. And it's not just large corporations which are taking advantage. There are more small and medium enterprises exporting from Australia to the United States than any other country except New Zealand. But our deep economic links do not end with trade. The US is the major source of investment in Australia, accounting for over a quarter of all foreign investment. Similarly Australia invests more in the US than in the next four countries combined.
The National Innovation and Science Agenda
The Government's National Innovation and Science Agenda is helping to forge new opportunities for pioneering Australian businesses, attracting attention from leading companies in the US.
Prime Minister Turnbull's visit in January highlighted to US audiences the Government's new commitments under the Agenda, including the $8 million Incubator Support Program and a $26 million program to support the development of silicon quantum computing technology. During his visit, the Prime Minister met with a number of Australian companies, including QxBranch, an advanced data analytics firm doing business in the US. His visit reinforced to the local industry the creativity and dynamism of Australian business.
The Government continues to support Australian companies who are willing to take risks to grow their business in the expansive US market. Events such as the G'day USA Emerging InnovatorsXchange in Los Angeles in April and the Washington Embassy's Australian Defence Science and Technology Conference in May are helping to build linkages between innovative Australian firms and their US counterparts. With more events planned for the remainder of 2016 and beyond, the Government is prioritising assistance for Australian companies to get their foot in the door of the US market.
Expanding Australia's Presence in the US
To build on the work of the NISA and capitalise on the strength of the US economy, the Australian Government is enhancing Australia's presence in the US with new offices and events. As Australia's leading investment market by a large margin and the world's premier destination for businesses to develop globally, accelerate and incubate, the US was an obvious choice for an event to refresh our strong commercial relationship. In February this year, Australia-United States Business Week reflected the most intensive business-to-business engagement Australia has mounted in the US. It included over 80 events across six cities with more than 230 Australian business delegates traveling to the US to participate. Austrade arranged programs focused on areas where new opportunities are emerging such as medical, agricultural and resources technology, big data analytics and cybersecurity and tourism.
Business Week events attracted US executives keen to discuss new business, investment and collaboration. More than 350 guests attended the AUSBW Business Dinner, where GE's Vice Chair of Business Innovations, Beth Comstock, provided valuable insights into GE's forward strategy. Partnership strategies for Global Value Chains were discussed with US corporate giants such as, Hewlett-Packard, Mars and Medtronic.
Australia-US Business Week included events in Houston and Boston, where Austrade has recently opened new offices. Houston is the fourth largest city in the US and a global centre of resources and energy, while Boston is an epicentre for life sciences innovation and technology-rich industries.
Austrade's increased presence throughout the US is helping to identify opportunities for Australian business to grow and thrive in the world's largest and most innovative economy.
Australian Innovation in the US
As the trade and investment links between the US and Australia expand, a number of innovative Australian companies are thriving in the US market. The success of these companies is driven by the burgeoning US economy, a unique risk taking culture as well as access to bountiful capital and world-leading R&D.
Melbourne-based agribusiness company Nufarm has been operating in the US since 1998. The company's North American headquarters is located in Chicago, the heart of the mid-west region, which supplies over 45 per cent of total US agricultural produce. Nufarm's US operations specialise in crop protection products and have helped it to become the world's eighth-largest crop protection company. The company's success in the US is underpinned by its extensive research and development facility in Research Triangle Park, North Carolina, situated among some of the world's most innovative corporations.
Another Melbourne-based company, Blue Dot Innovation has recently expanded its footprint to San Francisco. The company provides state-of-the-art location services technology for mobile. Co-Founder Emil Davityan made the move to California to be closer to venture capital, for proximity to major customers and for potential opportunities for acquisition. However, it hasn't all been smooth sailing. Bluedot has faced cost pressures, including from the price of labour in San Francisco and Silicon Valley, which can be significantly more expensive than Australia, and a fluctuating exchange rate. Overall, the advantages of having a location in the global heart of the technology boom have far outweighed the costs, with Bluedot's month on month growth averaging 100% since it arrived in the US.