The Ratio of Exports to Imports

Create date - 2021-01-08 11:42:01
Update date - 2021-03-26 14:35:07

Foreign trade developments are closely monitored in open economies because of their information on economic vitality and their importance for internal and external economic balances. In foreign trade balance, Export = Import means foreign trade is in balance. If Export> Import then foreign trade is in surplus, Export <Import means there is a foreign trade deficit. One of the indicators used for this purpose is the ratio of exports to imports. In short, the ratio of exports to imports is one of the indicators that serve to indicate a country's foreign trade deficit. It shows how much the country can pay for the value of the goods sold abroad and the value of the imported goods. The Coverage Ratio is calculated with the formula (Export / Import) * 100. A coverage ratio greater than 100 indicates that the country has a foreign trade surplus, and less than 100 indicates that it has a foreign trade deficit. The ratio of exports to imports is suitable for comparison both between countries and within the same country.

Since the founding of the republic at various time periods Turkey has given weight to export substitution industrialization policies or sometimes, like in the case of Latin American countries, import substitution policies. There has not been a period in the history of Turkish economy in which exports exceeded imports, that is, the ratio of exports to imports exceeded 100. Turkey's export share is 93 percent of first-order manufacturing goods. (Eğilmez, 2014)

As the development levels of the countries increase, generally the ratio of exports to imports increases. Among the developed countries USA, England, France are countries that exports cannot meet imports. In other words, the ratio of exports to imports is less than 100. According to the data of Trademap 2019 the most developed countries of Europe such as Germany, Netherlands, Italy, Belgium, and Switzerland, have the ratio of exports to imports higher than 100. In North America, on the other hand, according to data of Trademap 2019 Canada and Mexico generally dealt with exports rather than imports, and therefore they have a positive export-import balance. Surprisingly, the USA, which has been the most exporting country in the last century, both lost this title to China and started to import more than it exports. While the export coverage ratio of the leading countries in the world export such as South Korea, Japan, China, Malaysia, Indonesia, Thailand, Singapore, Taiwan, Vietnam in the Asia-Pasific region is over 100, this rate is under 100 in the countries of the region such as India, Philippines and Pakistan.

According to Trademap 2019 data, at developing countries like Turkey, Indonesia, the Philippines, export volumes are greater than their import volumes. On the other hand at Malaysia, Brazil and Vietnam import volumes are greater than export volumes due to their export policies and high currency rates.