Measuring global competition in export markets and export sectors

Abstract

In policy diffusion research, trade is linked to competition as a diffusion mechanism and theoretically discussed within the framework of the efficiency or compensation hypothesis. In this Technical Paper, we present two novel datasets that capture economic competition for 164 countries from 1962 - 2018 in a more differentiated way than before. Our new indicator "global economic competition on export-markets" directly measures the similarity of two countries A and B in terms of the distribution of their exports among the respective export partners. If the trade volumes of A and B are similarly distributed among the sales markets, then there is a high degree of competition. The new indicator “global economic competition in exports-sectors” disentangles the competition argument by differentiating exports by product groups. Two countries A and B might have similar countries as their preferred trading partners, but enter the markets there with completely different products. In such a case, one would hardly treat them as “competitors”. Therefore, we analyze the sectorally subdivided export data on the SITC 1-digit-level, distinguishing 10 product groups to measure the similarity of two countries A and B.