KFC in Africa and How Imports Create U.S. Jobs

The WSJ had an interesting article last week about KFC's expansion in Africa ("KFC Savors Potential in Africa:Yum Brands Unit Plans to Double Number of Outlets on Continent, Where Middle Class Is Growing"), here are some quotes and observations:

1. "By 2014, the Louisville, Ky., restaurant-holding company expects to double its number of KFC outlets in Africa to 1,200 (see chart above). In the next four years, it aims to more than double its revenue on the continent to $2 billion.  "Africa wasn't even on our radar screen 10 years ago, but now we see it exploding with opportunity," says David Novak, Yum's chairman and chief executive officer."

2. "American restaurant companies and retailers have been moving into emerging markets as growth in the U.S. and other developed countries has slowed, and Africa is increasingly being added to the list."

3. "With more than 600 KFCs in South Africa now, the chicken chain has a 44% share of that country's $1.8 billion fast-food market, followed by South African chain Nando's, with 6%, and McDonald's and the local Chicken Licken, each with a 5% share."

MP: This example illustrates why the Obama administration's narrow focus on "doubling exports in the next five years to create U.S. jobs and combat high unemployment" is incomplete.  The U.S.-based KFC has significantly benefited from economic growth in China over the last five years, as it expanded its operations there to take advantage of a growing middle-class with the rising disposable income that allows consumers there to eat fast-food more often. Now the same trend of a growing middle-class in Africa will allow KFC to double its restaurants in Africa over the next four years, from 600 to 1,200 by 2014. 

And what is one source of the increased income in China and Africa that allows American companies like KFC and McDonald's to expand global operations, become potentially more profitable, and increase the number of jobs at their American headquarters as their global operations expand?  Exports from China and Africa to the U.S., or from our end: IMPORTS.  

It's those imports to the U.S. that provide foreigners the income they need to purchase our exports.  So instead of focusing so narrowly on half of the international trade equation and trying to expand exports, we should realize that increases in imports are a sign of economic vibrancy, and bestow significant benefits on American consumers and businesses, as well as provide foreigners with the resources to buy more of our exports.  

As I have pointed out in a previous post, why not have a goal of "doubling both exports AND imports" over the next five years? That would be a much more effective path to economic growth and job creation for all industries than an export-focused mercantilist program of job growth that would only benefit certain American industries.