Over the past 60 years, trade liberalization has contributed to improving the standard of living of billions of people across the world by creating new economic opportunities and providing greater choice and lower prices to consumers.
An open international trade and investment environment is fundamental to foster economic growth, job creation, and prosperity. The global recession and financial crisis did not alter this fundamental reality. And further measures to open trade will be a vital part of economic recovery. Businesses have the resources to invest, creating growth and jobs.2 This is recognized by all credible economic commentators, including the OECD, the IMF, the WTO and the World Bank. The OECD, for example, estimates that global GDP could increase by between US$4 and $7 trillion if countries were to halve their trade barriers.
However, and especially in times of crisis, governments come under pressure to adopt measures to “protect” national industries and jobs. G20 leaders, for example, have recognized this and have stated publicly that they support the multilateral trading system and encourage more open trade, even as the financial crisis began contaminating the larger global economy. At the 2008 Washington Summit, heads of state announced their commitment to refrain from raising new barriers to trade and investment and extended the fight against new trade barriers to the end of 2013. The G20 Seoul Summit declaration acknowledged that uneven growth and widening imbalances fuel the temptation to diverge from global solutions into uncoordinated actions, but that such uncoordinated policy actions only lead to worse outcomes for all.
To further understand the extent to which governments are following through on their commitments to create genuinely open economies, the ICC commissioned this research to develop an Open Markets Index to measure the openness of key economies. It is anticipated that this index will be updated on a regular basis in order to track changes in openness over time, and that it may be further refined and developed.
Open markets are characterized by the absence of man-made barriers against the cross-border flows of productive factors such as goods, services, capital and labor. An index, based on the combination of various indicators, should provide the ranking of countries in accordance to their degree of openness. The most open economies will rank at the top.
In contrast to other existing globalization indices, the focus of this research is on the ease of access to an economy, concentrating on actual barriers and market access barriers attributed to government policies. As such, the report has not considered either:
- Restrictive private business practices;
- and Behind-the-border measures (e.g. subsidies)
The Open Markets Index (OMI) set out in this report is comprised of four key components:
- Observed trade openness
- Trade policy
- Openness to capital flows
- Trade-enabling infrastructure
The 75 economies explored in this study are about evenly split between developed and developing countries and comprise all members of the G20, all the six newly industrialized economies in Asia (NIEs) and all the EU member countries.
The remainder of this paper is structured as follows:
- Section 2 provides a review of the methodology used to develop the index
- Section 3 provides the key findings from the OMI and discusses the interpretation for key countries
- Section 4 provides some conclusions