ICC Open Markets Index 3rd Edition 2015
This 3rd edition of OMI is critical in pinpointing and measuring obstructions to global trade. It provides an important reference for the G20 and the WTO to collectively lower barriers to trade and investment and unlock jobs and growth.
Over the past 60 years, the multilateral trading system has helped improve the standard of living of billions of people worldwide by creating new economic opportunities and providing greater choice and lower prices to consumers.
Six years after the global financial crisis, however, Gross Domestic Product (GDP) growth for a majority of the world economies has shifted to a noticeably lower path compared to pre-crisis levels.
In the period covered by this report, the world economy is still struggling to overcome the impact of the financial crisis. This impact is perhaps most evident in Europe during 2015 with the uncertainties over the future of the Eurozone. In January 2015, the World Bank once again revised its forecast for global growth downward to 3% from its previous prediction of a 3.4% increase in June 2014.
World trade growth also remains sluggish. The United Nations World Economic Situation and Prospects 2015 (WESP) report estimates that world trade expanded by 3.4% in 2014, still well below the pre-crisis average rate of 6% (1990–2008). In a global economy where recovery remains fragile, additional measures to liberalize trade can provide a significant debt-free stimulus and much needed boost to global GDP.
As the world business organization, the ICC has advocated for liberalized trade at both intergovernmental and national levels. In the ICC view, a critical aspect of liberalized trade is the extent to which individual economies – especially those heavily reliant on trade for growth – decrease barriers to trade and commerce.
Consequently, ICC commissioned research to develop an OMI to better understand the extent to which governments are following through on their commitments to create genuinely open economies and to measure the openness of key economies.
This 3rd edition of the OMI measures the performance of 75 countries in terms of market openness based on four specific components: their observed openness to trade, their trade policy regime, their openness to foreign direct investment, and their trade enabling infrastructure.
The OMI combines indicators of actual, de facto, market openness with those reflecting government measures considered barriers to market entry. Consequently, the results of the OMI serve two purposes:
- Ranking national market performance on openness to trade from most to least open is an effective way to focus on improvements and to monitor progress year-on-year.
- Evaluating a country’s performance across four indicators of openness to trade constitutes a tool for policymakers and authorities to identify deficiencies that deserve greater attention, thereby generating a roadmap for action and improvement.
Government authorities with better information on how their market perform – both on key indicators and relative to other countries – are better able to honour commitments to open trade, implement necessary changes, and resist regressive measures to “protect” domestic industries and jobs.
OMI 2015 Highlights
- The average of the aggregate scores of the 75 economies under review has increased incrementally from 3.5 in OMI 2011 to 3.6 in OMI 2013 and 3.7 in OMI 2015. This rise suggests that, by and large, the international community is successfully resisting temptations to increase protectionism.
- Despite the past progress made, countries still have much to do to improve the openness of their economies. Many of the world’s biggest economies (including the United States, Japan and France) obtain only average scores, while half of the 32 developing countries reviewed in the index rate below average.
- The two highest performing economies – and the only two ranked as excellent in terms of overall openness (scoring above 5.0) – are again Hong Kong and Singapore. Meanwhile, the worst performing economies (scoring below 2.0) are Pakistan, Bangladesh, Ethiopia and Sudan.
- G20 leaders have consistently emphasized the importance of open markets as part of their goal to drive global economic growth and job creation. The G20, however, is clearly not demonstrating the global leadership it strives to provide. The average of G20 country scores in OMI 2015 is, in fact, slightly below the average of the 75-country sample (3.4 compared to 3.7).
- Only one G20 country, Germany, ranks among the top 20 countries.
- Moreover, only Germany, Canada, Australia and the United Kingdom record an above average openness (category 2).
- BRICS countries (Brazil, Russia, India, China and South Africa) continue to lag with a collective below average overall score of 2.8. Nonetheless, there are some indications of progress. While South Africa was the only BRICS member to achieve an average score of 3.2 in OMI 2013, Russia and China have now (narrowly) achieved average scores of 3.0 and 3.1 in OMI 2015.
- 24 countries exhibit an increase in their aggregate score by at least 0.3 (rounded) points compared to the OMI 2011.
- These include: Austria, Chile, Chinese Taipei, Colombia, Latvia, Malta, Morocco, New Zealand, Norway, Peru, Portugal, Singapore, Slovenia, Sweden, Switzerland, Ukraine, Venezuela, and Vietnam.
- Six G20 countries show increases: Australia, Canada, Germany, Korea, Mexico and the Russian Federation.