Export Potential

Assessments

Market Analysis Map

Competitive Sectors

Target Markets

Fact about Bangladesh

The world chooses Bangladesh market!
But real thing should be opposite:
Bangladesh should choose her markets.

What Should We
Do?

Export Potential Assessment (EPA)

Methodology
Purpose: To help countries assess their
export opportunities and increase their
share in world trade
Export Potential Index:
Identification of priority products
Market Attractiveness Index:
Selection of target markets

Export Potential
Assessments
Export Potential Index
Export Performance Index
Revealed Comparative Advantage Indicator
Growth of Revealed Comparative Advantage
Indicator
World Demand Index
Share of World Exports Indicator
Growth of Share of World Exports Indicator

Market Attractiveness Index

Market Demand Index
Market Size (import value)
Trade Balance
Market Growth (import growth)
Change in Trade Balance
Market Prospects (GDP growth forecast)
Market Access Index
Distance Advantage
Total Exports from the Country to the Market
Relative Preferential Tariff Margin

Export Potential Index

Export Performance Index (for HS 4):
Revealed Comparative Advantage Indicator:
Objective: To assess how competitive the country
is in exporting a certain product as compared to
the world.
RCA (Balassa Index) = Xij/Xin Xwj/Xwn
Where Xij is the export of country i for j commodity
and n is a set of all exported commodities of
country i, while Xwj represents the world export of
same commodity j and Xwn is a world export of all
n commodities.

Revealed Comparative Advantage

(RCA)
RCA=
=2

RCA[1;] : A country has a revealed comparative

advantage in exporting a good
RCA[0;] : A country has a revealed comparative
disadvantage
RCA Log transfer: For some products the RCA can
be relatively low in comparison with the others
Objective: To avoid having sectors with extreme
export values dominate the distribution and to
make the distribution more normal.

Growth of Revealed Comparative

Advantage Indicator
Objective:

To assess if a certain
product has increased its share in a
particular countrys exports faster
than the world exports of the product
have increased in terms of their
share in world exports.
Mid-point growth rate (G) = *100
G= [ -100,+100]

Index Normalization
Formula
Min-max

normalization (Xindex) =100

[0,100]

World Demand Index (for HS

4)
Ever if a country may be able to produce large produce
large quantities of goods at a comparatively low price,
the export prospects will not be very promising if there
is not sufficient demand for that product in the
marketplace.
The final amount of the exported good is a reflection of:
Supply: How much of the product a country can export
at a certain price
For this we calculate the export performance index
Demand: How much of the product countries are willing
to import at a certain price
For this we calculate the world demand index

What quantity of the product will

be exported if demand contrast?

In the picture below we see that even if the export supply

curve remains unchanged but the demand for exports
decreases, the country exports less (q2 instead of q1) at a
lower
price (p2 instead of p1).
Price
Export supply
curve
p1
p2

Import demand
curve 1
Import demand
curve 2
Quantity
q1
q2

Share of World Exports

Indicator
Objective:

To assess how big the

market for a given product is in
relation to the entire world market.
Share in world exports
=*100

Growth of Share of World

Exports Indicator
Growth (G) (Mid-point growth rate)

Export Performance Index (for HS 6)

World
exports data for products at the

HS 6 level can produce misleading

results because of non-matching
codes and calculation RCA at the HS 6
level would be unreliable.
Average export=
Since the average export value can
have highly skewed distributions, we
transform it into logarithms

Growth of Exports
Growth (G) (mid-point growth rate)

World Demand Index (for HS

6)
Trade
balance as a share of total

trade
The export value does not always reflect
the reality
Objective: Guidance on trade support
for sectors that have a significant
production based by controlling for
pure re-exports.
Trade balance as share of total trade=

Change in trade balance as a

share of total trade
Objective: To account for the improvements
of the trade balance
Change in t=t2-t1
Where, t is trade balance as a share of total
trade
Why do we calculate the absolute change
instead of calculating the mid-point growth
rate?
We used the mid-point growth rate for positive
values only.

Market Attractiveness
Index
Market Demand Index:
With the necessary data at our disposal, we can
start the calculation of the first sub-index the
market demand index. It contains five
normalized trade indicators that are related to
the market demand for the selected product
regardless of the exporter.
The higher the index for the country, the higher
is the demand for the product of this country
and the more attractive is the market for
exporters.

Market Size (import

value)
The
demand for a product can be an important
criterion for the selection of attractive markets as it
indicates the products sales potential in different
markets.
Large markets that able to consume more often
prefer to import in large quantities that small
exporters are not always able to provide.
Furthermore, competition is sometimes tough in
these markets. Small markets, by contrast may have
less consumption power but can be easier to enter
due to a limited number of competing suppliers.
Annual Average import value=

Market Growth (import

growth)
In
contrast to the static market size indicator, the
market growth indicator shows the dynamics of the
market and thus gives a rough indication of its future
sales potential.
Fast growing markets are potentially more attractive
to exporters as they provide more space for
increasing the countrys exports to that market.
Slowly markets are less dynamic but can offer stable
and reliable conditions.
Import growth
=

Trade Balance
In using this indicator, we are looking for markets that have a
large trade deficit in a product, other things being equal.
A strongly positive trade balance signifies that the country
exports more of the product than it imports. The trade
balance indicator is thus employed to avoid giving high
ranking to large importers which in fact only import in order
to re-export the product without or with small modifications.
Exporters have an interest in selling directly to the country
where the products end users are located as this allows
them to make the product better suited to the needs and
preferences of the country and to potentially negotiate a
high margin.
Trade balance as a share of total trade
=

Change in Trade Balance

The
change in trade balance is a dynamic

indicator that complements the static trade

balance indicator. It can be useful for
countries that are just building up
production capacities in certain sectors and
are therefore constantly reducing their
trade deficits.
Change in trade balance

Market Prospects (GDP growth

forecast)
The forecasted GDP growth rate reflects the future prospects of
the market in general, regardless of product.
A low expected GDP growth means less purchasing power and
indicates that present export opportunities may fade over the next
years. A high GDP growth rate, by contrast, shows that the market
is dynamic and that there is plenty for augmenting imports.

GDP growth rate= [

The GDP forecast can be downloaded once and updated whenever

a new forecast is available on the IMF web-site. Visit: www.imf.org
The GDP growth rate is a macroeconomic indicator that we use to
identify the prospects of the markets in the future.

Market Access Index

Distance Advantage
Go to http://cepii.fr/anglaisgraph/bdd/distances.htm
Download dist_cepii.xls
Delete all the columns leaving only the
column with the country names and the
column named distwces.
Distance Advantage=Average distance of
supplying countries (km) - Bilateral Distance

Relative Preferential
Tariff Margin
To get customs tariff indicator you
can email:
marketanalysis@intracen.org
Preferential tariff
margin=average weighted tariff
applied to all other suppliers to the
market-customs tariff applied to
suppliers

Total Exports from the Country to

the Market

Common
language

Cultural
proximity

Institution
al
similaritie
s

Legal
similarities

Previously
established trade
networks
Common
border

Trade relations= Sum of total exports from the

country to the market

Source

https://
www.youtube.com/playlist?list=PLBD125D3A2EB0D420
http://
www.cepii.fr/CEPII/en/bdd_modele/presentation.asp?id=6

Advanced Market Analysis: Export Potential Index

(Identifying Products); Market Attractiveness Index
(Identifying Markets)
http://www.itc-learning.org/course/view.php?id=38

Any ?

Thank
You