Opportunities for Small Countries in the Global Economy
International trade is a critical economic tool that many countries – including small nations – participate to boost and support their economy. In fact, some small countries take part so much in international trade that the combined value of all their imports and exports exceeds their entire Gross Domestic Product (GDP).
Take Hong Kong for example, which current trade volume stands at 400% of its GDP. With limited agricultural land and scarce natural resources, Hong Kong chose to specialise its manufacturing and exports in technology and relies heavily on imports of goods. According to a recent report, Hong Kong’s economy expanded by 3.8% year-on-year in real terms in 2017, after growing by 2.1% in 2016. The government also forecasts Hong Kong’s economy to grow by 3-4% in 2018.
Another example is Ireland. Over the years, Ireland has established itself as one of the export leaders in the world, which has helped the country bring in billions every year. Among the most in-demand goods are medical equipment, organic chemicals, meat, aircraft, cereal preparations, pharmaceuticals, and perfumes. The imports that help contribute to Ireland’s impressive trade volume include vehicles, oil, machinery, plastics, and paper.
These cases only prove that small countries can take part in international trade to develop overseas markets and overcome the challenges in today’s global economy. Read on as we detail in this post about some of the hottest trade opportunities that small countries can profit from the global market.
- Nominal GDP: US$ 1.796 trillion (2016 est.)
- Nominal GDP Per Capita: US$ 8,649.95 (2016 est.)
- Capital: Brasília
- Total Imports: US$ 151.9 billion
- Promising Markets: Machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics.
As mentioned in our previous post, Brazil offers excellent opportunities in just about any area. A country that thrives in agriculture, IT, infrastructure, and tourism, Brazil has the largest population in South America, and its GDP grew by 2.2% in 2017 compared to previous year.
The top trading partners of Brazil are US and China, but it does not mean that smaller countries can’t trade with this nation. In fact, Brazil’s total import value from Iceland in 2016 is $15.6 million – which is quite impressive for a nation with a population of just over 300,000. Other smaller countries that trade with Brazil are Malta, Bangladesh, Macau, Greece, Luxembourg, and Serbia.
- Nominal GDP: US$ 1.205 trillion (2016 est.)
- Nominal GDP Per Capita: US$ 49,927.82 (2016 est.)
- Capital: Canberra
- Total Imports: US$ 215.4 billion
- Promising Markets: Machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products
Australia has an open economy and has relied upon foreign investment to build large-scale, capital-intensive industries over the past decades. Practically, all foreign direct investments are approved by the government, and screens only a small minority of investments over certain thresholds or in a handful of sensitive factors.
As a result, Australia has performed very well in attracting foreign investment. Like Brazil, Australia also imports goods from smaller countries such as Macau, Kuwait, Luxembourg, Christmas Island, Dominican Republic, and the Republic of Congo.
- Nominal GDP: US$ 2.264 trillion (2016 est.)
- Nominal GDP Per Capita: US$ 1,709.39 (2016 est.)
- Capital: New Delhi
- Total Imports: US$ 426.8 billion
- Promising Markets: Education services, industrial textiles, food processing and cold storage equipment, electronics, and clean energy and pollution control equipment.
India is an emerging market with a big appetite for imported goods and services. A young population with a median age of 25, India has a middle class that is estimated to increase tenfold by 2025. Nepal is one of the relatively small countries that exports to India and have exported goods worth US$ 561 million to the subcontinent in 2016. African countries such as Mauritania, Chad and Burkina Faso also export to this country, as well as European nations such as Serbia, Latvia, and the Slovak Republic.
- Nominal GDP: US$ 101.4 billion (2016 est.)
- Nominal GDP Per Capita: US$ 2,832.43 (2016 est.)
- Capital: Rabat
- Total Imports: US$ 39.64 billion
- Promising Markets: Renewable energy, water treatment, building construction and safety and security equipment.
Morocco was the first African country to reach a trade agreement with the U.S. and is becoming an essential player in the North African market. In 2018, its economy is projected to grow 3.1%.
Its proximity and relatively low labour costs have made it attractive to small European countries, which use it as a hub for their African sales and operations. Some of the small nations that exports to Morocco are Luxembourg, Trinidad and Tobago, Bosnia and Herzegovina, and Jordan.
Exporters from developing and smaller countries that are planning to enter developed markets should keep a keen eye on the established competition and may need particularly aggressive marketing and efficient logistics operations to persuade competitor’s customers to switch. By learning the lay of the land, choosing markets and partners with care, creating tailored strategies, and monitoring the competition continuously, exporters from small countries can gain substantial benefits from the markets above efficiently.
To learn how we at Alba Consulting can help you to formulate and implement strategies to bring your business onto the global stage, contact us today at +353 1 415 1252 or email us at firstname.lastname@example.org