Index of openness

With the increasing globalization of most economies, there is consequently more focus on understanding how international integrations influence macroeconomic performance. Economists use numerous indicators to measure the degree of an economy’s openness. One of the common indicators is the percentage of trade as a share of gross domestic product (GDP). It is the sum of exports and imports of goods and services measured as a share of GDP. (World Bank, 2013). This essay will firstly generally examine the degree of openness for various countries by using the percentage of trade as a share of GDP. It will then outline Singapore as the most open country, Brazil as the least open country and the most rapidly increased openness: Hong Kong. Finally, it will examine whether the degree of openness is correlated with faster long term growth in standard of living.
In advanced economies, there are many kinds of methods to analyse an economy’s openness. There has been one commonly used indicator which is the percentage value of the sum of exports plus imports as a share of national product. (Makin, 2009, p.8). Therefore, the feature in the data that we have complied is using the value of the sum of exports and imports divided by GDP times hundred. With this resource we found that the average of trade in Singapore, 334, is the highest number after Singapore separated from Malaysia in 1965. The trends of Singapore have stably increased during fifty years but it has suddenly dropped a little bit from 2009. (Refer to Appendix A and D). Although the average of trade in Hong Kong, 232, is lower than Singapore, Hong Kong has overtaken Singapore in 2009. Moreover, Hong Kong is the country or area that increased their openness the most. It has dramatically increased about 146% over fifty years. (Refer to Appendix A and D). On the other hand, the average of Brazil, 18, is the least open-market in 34 countries. The trends of Brazil fluctuated between 10 and 30 in these fifty years.