EXPORT WORLD CUP

By Prof. Dr. KHAWAJA AMJAD SAEED
Feb 03 - 09, 2003
 

World Cup terminology has become very popular. So far several Cricket World Cups have been played. India won it in 1983 in London. Pakistan achieved this feat in 1992 in Melbourne. Sri Lanka was crowned in 1996 in Lahore and Australia was the winner in 2000 in London with Pakistan as runner up. It is hoped that some day this honour will come to Bangladesh. There are four cricket playing countries in SAARC region. So far, as has been indicated above, three have been the cricket world cup winners.

In 2002 Football World Cup was played jointly hosted by Japan and South Korea and Brazil emerged as Football World Cup Winner.

This article will present a statistically backed review of Export World Cup. A long way is needed to be a big winner. However, the analysis presented in this paper will motivate all of us in SAARC region to receive a wake up call and respond positively to start our preparations to achieve great heights in export performance in global dimension to strengthen our foreign exchange reserves and develop a solid capacity to finance imports and achieve favourable balance of trade.

The backward linkages will be favourable industrialization, employment creation, higher standards of living, strong macro and micro indicators.

This article has been divided into the following parts:

PART FOCUS

A CLASSIFICATION OF ECONOMIES
B DECLINING TREND
C GLOBAL EXPORTS
D REGIONAL BLOCKS

PART A: CLASSIFICATION OF ECONOMIES

World Bank member economies have been divided into four categories, namely:, Low Income (LIC), Lower Middle Income (LMC), Upper Middle Income (UMC) and High Income (HIC). The following table presents the classification based on 2001 GNI per Capita:

Table 1
CLASSIFICATION OF WORLD BANK MEMBER ECONOMIES

S. NO.

ECONOMIES

$

1.

LOW INCOME (LIC)

745 or less

2.

LOWER MIDDLE INCOME (LMC)

746-2975

3.

UPPER MIDDLE INCOME (UMC)

2976-9205

4.

HIGH INCOME (HIC)

9206 or more

Source: World Development Report 2003. p-243.

Economies are divided among income groups according to 2001 GNI per capita, calculated using the World Bank Atlas Method.

Based on above classification data are available for 133 countries. This paper has been developed on the basis of data relating to the above countries.

However, Table No. 2 classifies all the world economies and all other economies with population of more than 30,000.

Table 2
CLASSIFICATION OF ECONOMIES BY REGION AND INCOME (FY 2003)

S. NO.

REGION

LIC

LMC

UMC

HIC

TOTAL

%

1.

SUB-SAHARAN ASIA

39

5

4

48

23

2.

LATIN AMERICA & THE CARIBBEAN

2

15

16

33

16

3.

OTHER HIGH INCOME COUNTRIES

29

29

14

4.

EUROPE & CENTRAL ASIA

8

11

9

--

28

13

5.

HIGH INCOME OECD

--

--

--

24

24

12

6.

EAST ASIA & THE PACIFIC

9

10

3

--

22

10

7.

MIDDLE EAST AND NORTH AFRICA

1

10

5

--

16

8

8.

SOUTH ASIA

6

2

--

--

8

4

 

TOTAL

65

53

37

53

208

100

 

PERCENTAGES

31

26

17

26

100

 

Source: Compiled from World Development Report 2003, p-243.

PART B: DECLINING TREND

Data for the above three years in respect of global trend are tabulated below:

Table 3
GLOBAL EXPORT TRENDS

YEAR

US $ BILLION

PERCENTAGE

2001

6,163

91

2000

6,350

94

1998

6,767

100

Source: Excerpted from World Development Reports 2001, 2002, 2003.

It will be apparent from the above data that declining trend persisted in the last four years. There is a need to expand global exports to reap the consequential benefits. Efforts must be made to boost global exports.

PART C: GLOBAL EXPORTS

Global exports of 133 countries as reported in World Development Report 2003 for the year 2001 were US $ 6,163 billion as against $ 6,350 for 2000 showing a decline of 3%.

Twenty one economies constitute 77% global exports as shown in Table 4. The first position is bagged by United States ($ 731 billion - 15%) followed by Germany ($ 570 billion - 12%) and Japan has bagged the third position ($ 405 - 9%). Other top ranks have been shared by France (No. 4: $ 320 b - 7%), United Kingdom (No. 5: $ 275 b - 6%), China (No. 6: $ 266 b - 6%). Other ranks are given in the above table.

Table 4
EXPORTS OF TOP 21 ECONOMIES: 2001

S. NO

COUNTRY

US $ Billion

%

% OF GLOBAL EXPORTS

1.

UNITED STATES

731

15

12

2.

GERMANY

570

12

9

3.

JAPAN

405

9

6

4.

FRANCE

320

7

5

5.

UNITED KINGDOM

275

6

5

6.

CHINA

266

6

4

7.

CANADA

262

6

4

8.

ITALY

241

5

4

9.

NETHERLANDS

230

5

4

10.

HONG KONG

191

4

3

11.

BELGIUM

189

4

3

12.

MEXICO

159

3

3

13.

KOREA, REPUBLIC

151.

3

2

14.

TAIWAN

123

2

2

15.

SINGAPORE

122

2

2

16.

SPAIN

111

2

2

17.

RUSSIAN FEDERATION

103

2

2

18.

MALAYSIA

88

2

1

19.

IRELAND

83

2

1

20.

SWITZERLAND

82

2

1

21.

SWEDEN

75

1

1

TOTAL

4,777

100

76

 

Global Exports

6,163

     

Source: Computed from World Development Report. 2003

Pareto Law is truly applicable to global exports as is apparent from the following table:

TABLE 5
FREQUENCY DISTRIBUTION OF GLOBAL EXPORTS

GROUP

No.

%

$ b

%

700

1

1

731

12

600

       

500

1

1

570

9

400

1

1

405

7

300

1

1

320

5

200

5

3

1,274

21

100

8

6

1,149

18

75-99

4

3

328

5

 

21

16

4,777

77

Less than 75

112

84

1,386

23

TOTAL

133

100

6,163

100

Only 21 countries constituting 16% of total number of global exporting countries exported 77% of value of exports. Only one country (US) is in the bracket of $ 700 billion. There was none in $ 600 billion. Only once country was in each of the bracket of $ 500 billion (Germany), $ 400 billion (Japan) and $ 300 billion (France). The remaining 17 countries were in the bracket between $ 75 billion to $ 200 billion. 84% (112) countries belonged to less than $ 75 billion. These constituted 23% of the value of exports.

PART D: REGIONAL BLOCKS

Several regional blocks exist in the world. However, we have researched on the following block relating to exports for 2001:

(a) OECD (High Income Economies)
(b) NAFTA
(c) G-8
(d) D-8
(e) SAARC

A brief review in respect of each of the above is presented below:

(a) OECD - HIGH INCOME ECONOMIES

There are 24 high income OECD countries, namely: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Korea Republic, Luxemburg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and United States.

Total exports of high income OECD countries in 2001 except for Iceland and Luxemburg were $ 4,008 billion.

(b) NAFTA (NORTH AMERICAN FREE TRADE AREA).

NAFTA consists of three countries namely: United States, Canada and Mexico. This is a geographically well knit group and at present, based on World Development Report 2003, has 18.69% share of global exports. This is slightly lower than 19.29% in 2000 and 19.39% in 1998. Total exports of NAFTA for 2001 were $ 1,162 billion (US - $ 731 billion - 63%, Canada - $ 262 billion - 23% and Mexico - $ 159 billion - 14%). There is a huge trade between US and Canada. This trend is also reflected in relationship between US and Mexico.

(c) G-8

Originally G-7 group was well known. Later Russian Federation joined it and it was known as G-8. This group consists of eight countries namely: United States ($ 731 b -25%), Germany ($ 57Q b - 20%), Japan ($ 405 b - 14%), France ($ 320 b - 11%), United Kingdom ($ 275 b - 9%), Canada ($ 262 b - 9%), Italy ($ 241 b - 8%). Total G-8 exports for 2001 were $ 2,907 representing 47% of global export. This percentage for 2000 was 47% and for 1998 was 50%.

(d) D-8

D-8 was set up by eight some Muslim countries. Its share in global exports was 3.89% for 2001, 4.05% for 2000 and 3.49% for 1998. Total exports for 2001 were $ 240 b. Respective figures for various D-8 countries were, Malaysia ($ 88 b - 36%), Indonesia ($ 57 b - 24%), Turkey ($ 31 b - 12%), Iran ($ 26 b - 11%), Nigeria ($ 19 b - 8%), Pakistan ($ 9 b - 4%), Bangladesh ($ 6 b - 3%) and Egypt ($ 4 b - 2%). In the year 2001, heads of states of D-8 met in Cairo to review the situation to play greater role in several economic activities including boosting exports.

(e) SAARC

It is most unfortunate that, while SAARC population is 22% of the World Population, its share in global exports for 2001 is only 1.07%. Respective percentage for 2000 was 1.01 and for 1998 was 1.03%. It is interesting that total exports for 2001 were $ 66 billion. Exports of various SAARC countries were: India $ 44 billion (66%), Pakistan $9 billion (14%), Bangladesh $ 6 billion (9%), Sri Lanka $ 5 billion (7%), Nepal $ 1 billion (2%) and Bhutan $ 1 billion (2%).

There is a vast scope of expansion of SAARC share in global exports. The following table presents percentage share of SAARC countries of global exports.

TABLE 6
PERCENTAGE SHARE OF SAARC COUNTRIES IN GLOBAL EXPORTS

S.No.

COUNTRY

% SHARE

1.

INDIA

0.71

2.

PAKISTAN

0.15

3.

BANGLADESH

0.10

4.

SRI LANKA

0.08

5.

NEPAL

0.02

6.

BHUTAN

0.01

7.

MALDIVES

0.00

Source: Calculated from: World Development Report 2003

CONCLUDING COMMENTS

The foregoing analysis ought to serve as a great motivation for developing countries in general and SAARC countries in particular to adopt Export Led Growth or some other model to achieve high export levels. This noble effort will result in an accelerated approach to economic development. Consequently employment will be promoted, skills will be enhanced and social justice backed with higher standard of living will be the consequential result.

Let us all get committed for achieving the above goal and enhance the joy of lives of millions in our region. With dedicated effort, the above dream can crystallize.

*Member Governing Council, International Federation of Accountants (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997). President, Institute of Cost and Management Accountants of Pakistan (ICMAP) (1997-2000). President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96). Pro Vice-Chancellor, University of the Punjab, Lahore (1994-96). Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996). Dean, Executive Programs, Punjab College of Business Administration, Constituent College of University of Central Punjab, Lahore. Chief Executive, KAS Institute of Management & Information Technology, Lahore.