C.10. Import Penetration of Goods and Services Sources

C. INTERNATIONAL TRADE OF GOODS AND SERVICES

C.10. Import penetration of goods and services

■ The highest penetration of imports of goods and for Ireland (–22 percentage points from 2000) and services is observed in smaller countries such as Canada (–8 percentage points). For these countries the Luxembourg (import penetration rate of 218% reason was not decreasing import values but the fact in 2007), Belgium (88%), the Slovak Republic (86%), that their gross domestic product (GDP) increased Hungary (80%) and Ireland (78%). Import penetration significantly more than the value of imports. The is lowest in larger countries such as the Japan (16.2%) opposite was true for the Slovak Republic, where and the United States (16.4%). imports increased more than GDP.

■ Among OECD accession countries, Estonia had the ■ The import penetration rates for trade of services highest import penetration rate (77% in 2007), show Luxembourg to have by far the highest degree of followed by Slovenia (70%). While the import import penetration (150%, up by 55 percentage points penetration rates of Slovenia, Israel and Chile from 2000). The OECD countries with the lowest increased between 2000 and 2007, the rates of Estonia import penetration of services were Mexico (1.6%), and especially of the Russian Federation decreased. Turkey (2%), the United States (2.7%) and Japan (3%).

■ Of the OECD enhanced engagement countries, China had the highest import penetration rate (35% in 2007, up by 13 percentage points from 2000), Sources followed by South Africa (33%). India’s import •OECD, Trade Indicators Database, May 2009. penetration rate also showed a rather strong increase • United Nations Statistics Division, National Accounts (25% in 2007, up by 12 percentage points from 2000). Main Aggregates Database, 2009.

■ Import penetration rates for goods from OECD For further reading countries for 2000 and 2007 show that the Slovak • OECD Trade Indicators, www.oecd.org/std/its/ Republic had the highest import penetration rate (78% tradeindicators. in 2007, up by 16 percentage points from 2000). • United Nations Statistics Division, National Accounts Distinct negative changes in the ratios were observed Main Aggregates Database, unstats.un.org/unsd/snaama.

The rate of import penetration

The rate of import penetration (MPij) for a country i and a product j corresponds to the share of domestic demand (Dij) in country i for product j, which is met by imports Mij.

MPij = 100 Mij/Dij. If P, X and M stand respectively for a country’s output, export and imports, its domestic demand, D will be equal to D = P – X + M and then the import penetration in country i for product j will be

MPij = 100 Mij/(Pij – Xij+ Mij). Competitiveness on the domestic market, as measured by the rate of import penetration, is based on the notion that a national industry endeavours to win, or at least keep, its shares in its own market. A low import penetration rate does not necessarily reflect import barriers but may be due to a good matching of output to domestic demand by highly competitive domestic firms capable of confronting foreign competition. Conversely, a high import penetration rate may reflect weak competitiveness on the part of domestic firms, especially when the export ratio is low. The size of the countries involved is also very important. The level of import penetration is usually greater in small countries because they are more open to the world economy and because of the way they specialise. As they are unable to specialise in many sectors, they become more dependent on imports. In the longer term, however, if the import penetration rate rises faster than domestic demand and is not accompanied by equivalent gains in export markets, this could indicate some deterioration of competitiveness.

76 OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 C. INTERNATIONAL TRADE OF GOODS AND SERVICES

C.10. Import penetration of goods and services

Figure C.10.1. Import penetration of goods and services, 2000 and 2007 Current prices, in percentage

2000 2007 % 163 100 218 OECD countries OECD OECD 90 accession enhanced countries engagement 80 countries 70

Italy Korea Spain Japan IsraelChile China IndiaBrazil Ireland Austria Finland Poland Iceland GreeceMexico FranceTurkey Belgium Hungary Sweden NorwayCanada 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/10.1787/841351801071 Figure C.10.2. Import penetration of goods, Figure C.10.3. Import penetration of services, 2000 and 2007 2000 and 2007 Current prices, in percentage Current prices, in percentage 2000 2007 2000 2007 Lux. 150% (2007) 96% (2000) Slovak Republic Luxembourg Belgium Ireland Czech Republic Denmark Hungary Belgium Luxembourg Netherlands Netherlands OECD30 average Austria Iceland Switzerland Sweden Poland Hungary Ireland Austria OECD30 average Norway Sweden Finland Germany Switzerland Korea Czech Republic Denmark Slovak Republic Finland Germany Portugal United Kingdom Canada Korea Mexico New Zealand Iceland Spain Greece Canada Norway Italy Spain Poland Turkey Portugal Italy France France Greece New Zealand Australia United Kingdom Japan Australia United States United States Turkey Japan Mexico (2006) 8070 60 50 40 30 20 10 0 0210 0304050 % % 1 2 http://dx.doi.org/10.1787/841436083618 1 2 http://dx.doi.org/10.1787/841441777180

Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 77 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), “Import penetration of goods and services”, in Measuring Globalisation: OECD Economic Globalisation Indicators 2010, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/9789264084360-30-en

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