Tradeflow Study - UNDP Black Sea Trade and Investment Promotion ...

IV. Conclusion
The study has undertaken a major evaluation of available quantitative indicators to identify
sectors which exhibit strong intra-regional trade or investment potential. As highlighted
previously, an important caveat to the analysis is that further information needs to be
collected at the enterprise level in order to corroborate the findings of the study. In the
absence of this firm level information, the study has attempted to use the latest trade
indicators available to identify key strategic sectors for the region.
Based on a comparison of actual trade flows and trade flows one would expect based on the
size, proximity and other indicators of the respective economies of BSEC, the study identifies
a number of sectors where countries are undertrading. The existence of untapped trade
potential can reflect structural impediments to each country’s ability to trade but can also
indicate the existence of asymmetric information whereby countries are unaware of
opportunities of trade between them. This study attempts to provide an answer to the latter
using indicators such as the revealed comparative advantage, intra-industry trade index,
intensity and complementarity of trade indices, and other trade performance indices.
The key strategic sectors in the manufacturing sector identified according to the gravity
equation and trade flow analysis are:
‣ Textiles and clothing (in particular HS Chapters 52, 54, 55, 60, 61, 62 and 64)
‣ Food and beverages (in particular HS Chapters 17, 18, 19, 21 and 22)
‣ Metal products (in particular HS Chapters 72, 73, 74 and 76)
‣ Agricultural products (in particular HS chapters (03 and 08)
‣ Wood products (in particular HS chapters 44, 48, 49 and 94)
In the services sector, a number of countries have exhibited growth rates in the in exports of
services which have outperformed the world performance. Moreover the region has a number
of sectors which have a high and dynamic import demand. The sectors which have exhibited
the highest trade potential are travel, transportation and other commercial services. The
greatest potential for trade lies in sectors where countries have made commitments to limit
restriction on market access and national treatment. In this regard, the study identifies the
following sectors as those with the highest indicative trade potential, based on a combination
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