3. COMPETING IN THE WORLD ECONOMY
3.1. International trade
The value of their international trade in goods and Luxembourg, financial services played a dominant
services reflects countries integration into the world role in exports, and in Ireland, technology payments
economy. Small countries are generally more inte- were a very important component of total imports.
grated: their exports tend to be in a limited number of
sectors and they need to import more goods and ser-
vices to satisfy domestic demand than larger coun-
tries. Size, however, is not the only determinant of
The trade-to-GDP ratio
trade integration. Other factors help explain differ-
ences across countries: geography, history, culture,
The most frequently used indicator of the
(trade) policy, the structure of the economy (especially
importance of international transactions rela-
the weight of non-tradable services), re-exports and
tive to domestic transactions is the trade-to-GDP
the presence of multinational firms (intra-firm trade).
ratio, which is the average share of exports and
The average ratio of exports and imports to gross imports of goods and services in GDP.
domestic product (GDP), in constant prices of 2007,
The trade-to-GDP ratio is often called the trade
increased between 1997 and 2007 in all OECD coun-
openness ratio. However, the term  openness to
tries. In 2007, it was over 160% in Luxembourg and
international competition may be somewhat
very high in Belgium, the Slovak Republic, Estonia,
misleading. In fact, a low ratio does not neces-
Hungary, as well as the Czech Republic. In contrast, it
sarily imply high (tariff or non-tariff) obstacles to
was less than 20% in Japan, the United States and
foreign trade, but may be due to the factors men-
Brazil, owing in part to their larger size.
tioned above, especially size and geographic
Traditionally, international trade in goods has been remoteness from potential trading partners.
the principal channel for economic integration. Over
the past 20 years, however, other forms of transactions
have become prevalent (e.g. foreign direct investment,
portfolio investment) as firms increasingly implement
global strategies and capital movements are liberalised. Sources
In 2007, the average trade-to-GDP ratio of goods in the
OECD, National Accounts Database, June 2009.
OECD area was 19.2%, up from 17.3% in 1997, an
International Monetary Fund, June 2009.
increase very similar to that for total trade. The ratio
was above 60% in the Slovak Republic, Belgium, the
Czech Republic, Hungary and Estonia.
Going further
As a share of GDP in 2007, average trade in services in
the OECD area only accounted for around 5.4% of GDP. OECD (2005), Measuring Globalisation: OECD Handbook
Luxembourg and Ireland had the highest values. In on Economic Globalisation Indicators, OECD, Paris.
OECD SCIENCE, TECHNOLOGY AND INDUSTRY SCOREBOARD 2009 © OECD 2009
84
3. COMPETING IN THE WORLD ECONOMY
3.1. International trade
Total exports and imports, 2007
Average, as a percentage of GDP
2007 1997
%
180
160
140
120
100
80
60
40
20
0
1 2 http://dx.doi.org/10.1787/744325750814
Exports and imports of goods, 2007 Exports and imports of services, 2007
Average, as a percentage of GDP Average, as a percentage of GDP
1997 1997
Slovak Republic Luxembourg
122
Belgium Ireland
65
Czech Republic Denmark
Hungary Estonia
Estonia Belgium
Slovenia Netherlands
Netherlands Sweden
Austria Austria
Luxembourg Iceland
Switzerland Hungary
Ireland Israel
Germany Switzerland
Poland Slovenia
Sweden Norway
Chile Greece
Korea Czech Republic
Finland United Kingdom
Denmark Slovak Republic
Israel Finland
China India
Portugal Spain
Canada New Zealand
Norway Germany
South Africa Portugal
Mexico (2006) Korea
Iceland Poland
Italy Italy
Indonesia OECD
Russian Federation South Africa
New Zealand Chile
France France
Spain Canada
Turkey Australia
OECD Indonesia
United Kingdom Russian Federation
Greece China
Australia Turkey
India United States
Japan Japan
United States Brazil
Brazil Mexico (2006)
0 10 20 30 40 50 60 70 80 0 10 20 30 40
% %
1 2 http://dx.doi.org/10.1787/744374642145 1 2 http://dx.doi.org/10.1787/744425588570
OECD SCIENCE, TECHNOLOGY AND INDUSTRY SCOREBOARD 2009 © OECD 2009
85
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