This section contains eight indicators that summarize the size, importance, composition and growth of trading relationships. This is the only section in which users may select both imports and exports; sections 2, 3, and 4 deal exclusively with exports. The first two indicators give an overview of the size and importance of trade. Exports, Imports, and Trade Balance reports the total value of imports, exports, and balance of trade between chosen reporters and partners, serving as a preliminary indicator of the reporters’ involvement in world trade. The Openness to Trade indicator provides a normalized view of a country’s total trade by summing the total value of exports and imports and dividing by GDP; it also gives an illustration of the concave relationship between GDP per capita and trade openness. The subsequent four indicators characterize trade growth and competitiveness. Sectoral Composition, Comparative Advantage, and Growth gives the percent of trade represented by selected sectors, compound annual growth rate, and revealed comparative advantage (Balassa, 1965). Primary Products, Shares, and Growth ranks products according by trade value, whereas Market Composition and Growth does the same for markets. The indicator Growth in Value versus Volume investigates whether changes in trade value are due to changes in volume or due to changes in prices. The final two indicators in the section suggest potential sources of future growth. The Trade Intensity Index uses similar logic to that of revealed comparative advantage to indicate with which partners a reporter has a relatively intense trading relationship, vis-à-vis the world. Finally, the Trade Complementarity Index evaluates the extent to which the export profile of a reporter complements the import profile of a partner; strongly complementary profiles may indicate exploitable sources of growth.

This indicator provides the total exports, total imports, and trade balances for any number of reports, both in absolute value and as a percentage of GDP. The trade balance indicates the degree to which domestic demand exceeds domestic supply, or vice versa. The trade balance alone does little to describe the health of an economy, yet may be used as an indicator of the country’s involvement in the international marketplace. It is calculated as total exports to the world minus total imports.

Openness to trade is measured as the trade-to-GDP ratio. It weighs the combined importance of exports and imports of goods and services in an economy, giving an indication of the dependence of domestic producers on foreign demand and of domestic consumers on foreign supply. There is a concave relationship between trade openness and per capita income: as incomes rise, countries tend to trade more, but at a decreasing rate.

This indicator shows the sectoral composition of the reporter’s exports to a given partner or group. The revealed comparative advantage (RCA) index is a measure of a country’s relative advantage or disadvantage in a specific industry as evidenced by trade flows. An index above the unit indicates that a country’s share of exports in that sector exceeds the global export share of the same sector. If this is the case, we infer that the country has a comparative advantage in that sector. The compound annual growth rate (CAGR) is the year-over-year growth rate. It is calculated by taking the nth root of the total growth rate, where n is the number of years.

This indicator ranks products according to their relative importance in a country’s trade, showing which products are most important by value. It returns the value of trade in each product, the percent of total trade to the selected partner that this represents, its rank, and its growth rate. The compound annual growth rate (CAGR) is the year-over-year growth rate. It is calculated by taking the nth root of the total growth rate, where n is the number of years.

This indicator ranks the top markets for the reporter’s selected products, reporting the value of trade with each partner as well as the percent of total trade this represents. Also reported is the compound annual growth rate (CAGR): the year-over-year growth rate. It is calculated by taking the nth root of the total growth rate, where n is the number of years.

Observed growth (or contraction) may be due to changes in prices, changes in export volume, or both. This indicator returns indexes for trade volume and trade value from the WDI database. Value indices are the current value of imports or exports (c.i.f.) converted to USD and expressed as a percentage of the average of the base period (2000). Volume indices are the ratio of the import or export value index to the corresponding unit value index. Unit value indexes are based on data reported by countries with demonstrated UNCTAD quality controls using the previous year’s trade values at the SITC-3 level as weights.

The trade intensity index uses similar logic to that of revealed comparative advantage, but for markets rather than products. It indicates whether a reporter exports more, as a percentage, to a partner than the world does on average. It is measured as country i's exports to country j relative to its total exports divided by the world’s exports to country j relative to the world’s total exports

The trade complementarity index indicates to what extent the export profile of the reporter matches, or complements, the import profile of the partner. A high index may indicate that two countries would stand to gain from increased trade, and may be particularly useful in evaluating prospective bilateral or regional trade agreements

This section contains seven indicators the characterize export portfolio diversification and trading relationships. Product and market diversification are closely tied to economic development, with more advanced economies exporting a wider range of goods to a greater number of trading partners. These indicators together provide perspective on the degree to which countries are taking advantage of potential trading relationships. Products are defined at the HS six-digit level. Markets are defined as partner countries and exclude outlying territories. The first indicator, Number of Products and Markets, provides a simple count of how many products (with trade values of at least 10,000 USD) each country exported in a given year and the number of destination markets. This serves as a basic framework for the other indicators in the section.

The next four indicators provide two indices each for products and markets. The Herfindahl-Hirschman Product Concentration Index measures dispersion of trade value across an exporter’s products, while the Herfindahl-Hirschman Market Concentration Index does the same across an exporter’s partners. A higher value indicates greater concentration of value across products or partners. Growth Orientation of Products compares the annualized growth rate of each exported product’s trade value with that of the world. A growth rate above the world growth indicates an increase in market share. Growth Orientation of Markets reports the same growth comparison by market rather than by product.

Value Reach of Exports offers a count of the number of product-partner relationships that were created, survived, or terminated between selected start and end years. The Index of Market Penetration measures the extent to which a reporter’s exports reach proven importers of those products worldwide. A higher index indicates that a country already exports to a greater percentage of existing markets for its products; a low value indicates potential for expansion.

This indicator produces a list of all countries and gives the number of partner markets and number of products exported, counted at the 6-digit HS level. A market is counted if the exporter ships at least one product to that destination in the given year with a trade value of at least 10,000 USD. A product is counted if it is exported to at least one destination in the selected year with a value of at least 10,000 USD.

This indicator is a measure of the dispersion of trade value across an exporter’s products. A county with a preponderance of trade value concentrated in a very few products will have an index value close to 1. Thus, it is an indicator of the exporter’s vulnerability to trade shocks. Measured over time, a fall in the index may be an indication of diversification in the exporter’s trade profile. The user has the option of selecting product clusters, which will return the index with calculated only for that specified subset of products. Note that if a country exports only a single product, then the indicator returns no value.

This indicator is a measure of the dispersion of trade value across an exporter’s partners. A county with a preponderance of trade value concentrated in a very few markets will have an index value close to 1. Thus, it is an indicator of the exporter’s dependency on its trading partners and the danger it could face should its partners increase trade barriers. Measured over time, a fall in the index may be an indication of diversification in the exporter’s trading partnerships. The user has the option of selecting product clusters, which will return the index calculated only for that specified subset of countries. Note that if a country exports to only a single market, then the indicator returns no value.

This indicator evaluates the growth potential for a country’s exports by comparing the compound annual growth rate (CAGR) of its primary exports to the worldwide growth rate of those same products. A growth rate above world growth implies an increase in world market share. Countries whose primary exports are in high growth industries may be well positioned for future growth. Furthermore, if the reporter’s growth lags behind world growth, this may signal the presence of barriers inhibiting growth. The indicator also reports each product’s value share of the selected country’s total exports.

This indicator evaluates the growth potential for a country’s exports by comparing the compound annual growth rate (CAGR) of its primary exports to their worldwide growth rate. A growth rate above world growth implies an increase in market share. Countries whose primary exports are in high growth markets may be well positioned for future growth. Furthermore, if the reporter’s growth lags behind world growth, this may signal the potential for further expansion in the relevant market or, on the other hand, the existence of barriers inhibiting growth. The indicator also reports each product’s value share of the selected country’s total exports.

Economic development is generally accompanied by the introduction of new products, and the ability of a country to sustain trade relationships is a sign of economic maturity. This indicator reports the birth, survival, and death of products, as well as their trade values and number of markets to which they are exported in user-selected start and end years. A high death rate among products dispersed across industries may indicate economic volatility; concentrated in a sector, it may indicate evolutions in domestic production.

This indicator measures the extent to which a country’s exports reach already proven markets. It is calculated as the number of countries to which the reporter exports a particular product divided by the number of countries that report importing the product that year. A low export penetration may signal the presence of barriers to trade that are preventing firms from expanding the number of markets to which they export.

This section contains three indicators that draw on outside data sources to classify trade flows according to technological sophistication and explore Heckscher-Ohlin factor-based analyses of trade. The sophistication of a country’s export products provides insight into its level of economic development and its location in the global production chain.

Technological Classification of Exports draws on work by Lall (2000) to sort all products into one of five mutually exclusive technological groupings: high tech, medium tech, low tech, primary products, and resource-based products. Sophistication of Exports (EXPY) uses methodology introduced by Hausman et al. (2006) to estimate the level of technological sophistication embodied in a country’s export portfolio. Finally, the Export Portfolio and Factor Endowments indicator uses data from Cado et al. (2010) to compare the factor intensities of a country’s export products with its factor endowments. The factors of consideration are human capital, proxied by years of education, and physical capital, proxied by a perpetual inventory method of capital stock estimation

This indicator gives a percentage breakdown of a country’s exports according five broad technological categories embodied in the final products. The categories are: high tech, medium tech, low tech, primary products, and resource-based products (Lall, 2000). While the assignment of products to specific categories is not uncontroversial, analyzing how a country’s export basket has changed over a span of years may give insight into the pattern of its economic development.

Estimating the level of technological sophistication embodied in a country’s export portfolio gives an indication of that country’s economic development. PRODY is an outcome-based measure of sophistication: if a product is mostly produced by rich countries, then it is revealed to be a “rich,” or sophisticated, product. PRODY is calculated as a weighted average of per capita GDP of countries producing that product, with weights derived from revealed comparative advantage. The country’s expected GDP per capita, EXPY, is given by summing all the PRODY values for the products exported by the country, each weighted by the product’s share in total exports.

Economic theory predicts that countries will specialize in products that are intensive in their relatively abundant factor. This indicator compares the value of a country’s exports, the revealed factor intensities of those products, and its endowments of physical capital and human capital. The revealed physical capital intensity (RPCI) and revealed human capital intensity (RHCI) and are computed as weighted averages of the respective factor endowments of countries producing each product, with weights derived from revealed comparative advantage.

The persistence of trading relationships is a recognized sign of economic maturity. This section introduces three indicators that evaluate the duration and resilience of product-partner relationships and explore the factors influencing product birth and extinction.

The first indicator, Export Duration, measures the survival rate over successive years of new product-market relationships of at least 10,000 USD. The second indicator, Export Suspension and Factor Endowments, identifies the trade flows of at least 10,000 USD that have disappeared since the selected start year and compares the factor intensities of these products to the chosen country’s factor endowments. The expectation is that product death will be more likely there farther their relative factor intensities are from the exporter’s factor endowments.

Changes in export flows can take place along two different margins: intensive and extensive. The intensive margin covers changes in existing trade flows, and can be further divided into increases, decreases, and extinctions. The extensive margin covers the birth of new trade flows, which may occur because of the introduction of a new product, entry into a new market, or product diversification with an existing partner. The final indicator, Decomposition of Export Growth along Margins of Trade, divides all trade growth into one of seven mutually exclusive and exhaustive categories according to these margins.

This indicator reports the number of new product-partner relationships with trade values of at least 10,000 USD in the start year and the number and percentage of those that survive in each succeeding year until the selected end date. The ability to maintain trade relationships is a sign of a well-developed economy. Large scale deaths of trading relationships may reflect economic shocks or be the result of new policies. By selecting specific product groups, users may evaluate the expansion, contraction, and volatility of specific industries.

This indicator identifies the trade flows of at least 10,000 USD that have disappeared since the selected start year and compares the factor intensities of those products to the chosen country’s factor endowments. Factor intensities are constructed as a weighted average of the factor endowments of all countries exporting each product; see indicator 3-3 for complete description. As such the inverse of the Euclidean distance between the factor endowment and a product’s factor intensity serves as a measure of comparative advantage. The indicator also returns each product’s value share in total partner trade.

Export growth can be divided into the expansion of existing trade flows (the intensive margin) and the addition of new products and markets (the extensive margin). This indicator assigns all product growth—and contraction—to one of seven bins.