Economics in a picture
Trade openness of the Portuguese economy shows an upward trend but is lower than suggested by the main determinants
The trade openness of a country measures the intensity of its foreign trade links and is calculated as the sum of exports and imports flows as a percentage of GDP. In the Portuguese case, this indicator has shown a marked upward profile since 2009, which is expected to continue over the projection horizon. Notwithstanding these developments, the trade openness of the Portuguese economy is still below the level observed in OECD countries with similar characteristics.
There is a set of factors that determines a country’s higher or lower propensity for trade integration. These include the degree of trade policy liberalisation, the size of the country (area and population), the stage of economic development and the geographical remoteness in relation to economies that have a large weight on the world economy. Considering data for OECD countries over the 1980-2018 period, it is possible to assess whether a country’s trade openness is below or above expectations based on the mentioned factors. The estimate for the trade openness of the Portuguese economy in 2015-18 is significantly above the value observed on average in this period. This analysis suggests that there is room for further increases in the trade openness of the Portuguese economy, for instance through a higher participation in global value chains.
For further details see the Economic Bulletin of Banco de Portugal, December 2019 and the Box “Trade openness of the Portuguese economy: recent developments and outlook”, published in the Economic Bulletin of Banco de Portugal, June 2017.
Prepared by Cristina Manteu and Ana Sequeira. The analysis, opinions and results expressed herein are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem.
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