Specialisation in international trade: facts, vulnerabilities and remedies

Walter Steingress

Rue de la Banque, 2016, issue 20

Abstract: Countries tend to specialise in international trade as shown by the strong concentration of foreign trade. A country exports on average 10% of all existing goods and derives half of its export earnings from only 1% of its exported goods. As regards imports, a country imports on average a third of all existing goods, while half of its expenditure covers 2% of imported goods. The degree of concentration is inversely proportional to the size of the economy: small countries specialise more than large countries. This specialisation creates vulnerabilities. It affects the structure of the economy and increases its dependence on the shocks that may impact the sectors and goods concerned. This risk can be mitigated by R&D investment aimed at raising productivity.

Date: 2016
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