Ministry of Commerce And Supplies - Enhanced Integrated ...

Appendix 1Methodology for Export Potential Assessmentand Selection of 19 SectorsN T I S2010A. Methodology1. Export Potential and Socio-economic ImpactThe term ‘export potential’ is used here broadly to reflect the capacity to expand exports. For several of the19 sectors, Nepal has yet to establish significant export value or export growth rates, but potentials to do soare there.A detailed assessment of each sector, from both demand and supply side perspectives, is presented in Chapter2. In addition, the study uses an ITC methodology to compare sectors along four main indexes: Nepal’s export performance (Index 1) combines two indicators: the 2008 export value and annualexport growth rates between 2004 and 2008. Each indicator is weighted equally (50 per cent each).Some adjustments were made in the case of some services for which detailed data is unavailable. The index world market conditions (Index 2) combines three indicators: the size of the world marketfor a particular good or service (30 per cent weight), the dynamism of international demand (growthof world imports between 2004 and 2008) (30 per cent weight) and Nepal’s market access conditions(tariff advantage) to international markets (40 per cent weight). The latter indicator applies only togoods. Accordingly, for services, Index 2 combines only the first two indicators, which are weightedequally (50 per cent each). The index domestic supply conditions (Index 3) is based on a qualitative assessment using theinformation obtained by the team that carried out the detailed analyses and field work presented inChapter 2. The index combines indicators such as the quality of products, the productivity and cost ofproduction factors, and the efficiency of domestic supporting industries. The index socio-economic impact (Index 4) reflects whether industries have a favourable socio-economicimpact. The index combines indicators based on the estimated full-time employment generated by thesector, estimated participation of women, together with qualitative assessments of other criteria, suchas the impact on skill development, on disadvantaged areas, on water and energy resources, and morebroadly on the environment.The first three indexes are combined to assess overall export potential (see table 1.7).For indexes 1 and 2, composite indicators from 0 (worst performance) to 100 (best performance) weredeveloped to compare the 19 sectors along each indicator (such as export value). This allowed computingan overall index based on the weighted average of the indices for individual indicators (see Box A.1.1. fordiscussion). Once ranked according to the two indexes, the 19 sectors were then classified as high, mediumor low for each of the two indexes.For indexes 3 and 4, qualitative dimensions were used to also rank the 19 sectors as high, medium and low.See table 1.6.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT293