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The import penetration rate and the size of an economy: analysis by trade in value added

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  • MaÅ‚gorzata Fronczek

Abstract

The paper aims to estimate the level of market import penetration in selected countries using the traditional import penetration rate (IPR) and the modified formula, taking into account the concept of measuring foreign trade in added value (IPRcor). It also aims to examine the relationship between the IPRcor and the size of the country's economy (measuring by GDP). The calculations made for 64 countries (37 developed countries and 27 developing countries) indicated a strong negative relationship between IPRcor and GDP in years 2005-2015 (Spearman's rank correlation Rs stood about -0.7), i.e., in reality the market import penetration of larger economies was lower than in smaller economies. The separation of developed and developing countries in the analysis showed that the average level of market import penetration of developing countries was slightly lower (Rs between -0.63 and -0.78) than in the group of developed countries (Rs between -0.66 and -0.83).

Suggested Citation

  • MaÅ‚gorzata Fronczek, 2022. "The import penetration rate and the size of an economy: analysis by trade in value added," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 15(2), pages 149-166.
    • Handle: RePEc:ids:ijtrgm:v:15:y:2022:i:2:p:149-166
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