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C.1. Trade As a Percentage of GDP Sources for Further Reading

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C.1. Trade As a Percentage of GDP Sources for Further Reading C. INTERNATIONAL TRADE OF GOODS AND SERVICES C.1. Trade as a percentage of GDP ■ International trade in goods and services illustrates minor role of services in international trade contrasts countries’ integration into the world economy. In with their contribution to the domestic economies of relation to their gross domestic product (GDP), small member countries, where the proportion of total countries are generally more integrated. They tend to value added is around 70% and rising. specialise in a limited number of sectors and, to ■ satisfy domestic demand, they need to import and Growth rates of goods and services trade show the export more goods and services than larger countries. very strong performance of the OECD accession and Size alone, however, does not determine the level of enhanced engagement countries. China, India, the trade integration. Russian Federation, Estonia and Slovenia all showed significant higher growth rates than the OECD ■ The ratio of exports and imports to GDP, in current average. In addition, some OECD member countries, prices, increased between 2000 and 2007 in 21 out of especially in eastern Europe, showed strong trade 30 OECD countries. The largest increases within OECD performance, probably owing to their integration in countries were in the Slovak Republic (+20 percentage the European Union. This development is also points) and Luxembourg (+17 percentage points), reflected in the import penetration rates for goods for while Ireland’s (–22 percentage points) and Canada’s these countries (see Section C.10). (–26 percentage points) trade-to-GDP-ratios decreased the most. Luxembourg remained the OECD member country with the highest trade-to-GDP ratio at 327% in 2007, owing to financial services. The OECD Sources countries with the lowest ratios were the United • OECD Trade Indicators, May 2009. States (29% in 2007) and Japan (33%), in part because, • United Nations Statistics Division, National Accounts in general, larger economies depend less on external Main Aggregates Database, 2009. markets to satisfy domestic demand. For its part, Estonia, a very small economy, has the highest import For further reading penetration rate of all OECD accession countries. • OECD Trade Indicators, www.oecd.org/std/its/ tradeindicators. ■ In 2007, the average OECD-area trade-to-GDP ratio • United Nations Statistics Division, National Accounts for goods was 70%, up from 66% in 2000. OECD-area Main Aggregates Database, http://unstats.un.org/unsd/ trade in services was only 26.5% of GDP. The relatively snaama. Average trade-to-GDP ratio The most frequently used indicator of the importance of international transactions relative to domestic wealth creation is the trade-to-GDP ratio, which is the average share of exports and imports of goods and services in GDP. International trade tends to be more important for countries that are small (in terms of size or population) and surrounded by neighbouring countries with open trade regimes than for large, relatively self-sufficient countries or those that are geographically isolated and thus penalised by high transport costs. Other factors also help explain differences in trade-to-GDP ratios across countries, such as history, culture, (trade) policy, the structure of the economy (especially the weight of non-tradable services in GDP), re-exports and the presence of multinational firms (intra-firm trade). The trade-to-GDP ratio is often called the trade openness ratio. However, the term “openness” to international competition may be somewhat misleading. In fact, a low ratio does not necessarily imply high (tariff or non-tariff) obstacles to foreign trade, but may be due to the factors mentioned above, especially size and geographic remoteness from potential trading partners. 58 OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 C. INTERNATIONAL TRADE OF GOODS AND SERVICES C.1. Trade as a percentage of GDP Figure C.1.1. Sum of exports and imports of goods and services as a percentage of GDP, 2000 and 2007 2000 2007 % 200 Luxembourg: 279 %(2000), 327% (2007) 180 OECD OECD accession enhanced 160 countries engagement countries 140 120 100 80 60 40 20 0 1 Italy Korea Spain Japan Israel Chile IndiaBrazil Ireland Austria FinlandPoland Iceland Mexico Greece FranceTurkey China Belgium Hungary Sweden Norway Canada EstoniaSlovenia Denmark Germany Portugal Australia Indonesia Netherlands Switzerland Luxembourg New Zealand United States South Africa Slovak RepublicCzech Republic United Kingdom OECD30 average Russian Federation 1 2 http://dx.doi.org/10.1787/840405326334 Figure C.1.2. Trade in goods and services Average annual growth rate 2000-07 at current prices Exports (%) China 25 SVK CZE POL 20 India Russian Federation Chile HUN Estonia Brazil Slovenia LUX OECD30 average TUR 15 AUT DEU ISL South Africa NOR GRC IRL ESP PRT NLD DNK AUS CHE ITA FIN SWE 10 BEL NZL Indonesia GBR FRA KOR MEX Israel USA JPN CAN 5 51015 20 25 Imports (%) 1 2 http://dx.doi.org/10.1787/840410504674 Information on data for Israel: http://dx.doi.org/10.1787/888932315602. OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 59 From: Measuring Globalisation: OECD Economic Globalisation Indicators 2010 Access the complete publication at: https://doi.org/10.1787/9789264084360-en Please cite this chapter as: OECD (2010), “Trade as a percentage of GDP”, in Measuring Globalisation: OECD Economic Globalisation Indicators 2010, OECD Publishing, Paris. DOI: https://doi.org/10.1787/9789264084360-21-en This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]..
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