Ministry of Commerce And Supplies - Enhanced Integrated ...

Appendix 2Market Attractiveness IndexN T I S2010Using ITC’s database of trade flows and tariffs for practically all countries around the world, we rank all exportmarkets for each product separately along the following criteria:• The size of the market, measured by imports for the particular product (weight 30 per cent)• The dynamism of the market, as measured by growth rates, difference between growth rates for theparticular market and world average and absolute growth (weight 50 per cent).• The market access conditions (openness), as measured by the ad valorem equivalent tariff appliedto imports from Nepal and the difference between the tariffs applied to Nepal and to its five largestcompetitors in the particular market (weight 20 per cent).*Even though a lot of other, more specific factors play an important role in identifying potential export markets,which is something that has to be done primarily by the individual exporter or supporting agencies, the indexcan give an idea about whether there exist promising markets to which Nepal does not export yet. There arealso several markets to which Nepal exports indirectly via India and to which more direct exports could be apromising option for Nepalese exporters. This is for example the case for cardamom.Detailed results for each sector are presented in the individual industry factsheets (see next section). Both aweighted ranking is shown and rankings according to individual indicators (size, dynamism, openness) and thecurrent export markets.World trade data, on which the identification of attractive markets is essentially based, does not always allowus to identify the actual trade flows of the underlying product which Nepal exports. For two products (largecardamom and instant noodles) other sources were used that allow distinguishing between different products(large versus small cardamom or instant noodles versus other pasta products). This is explained in detail in theindustry factsheets. For services, different approaches were used depending on the available data. The maincompetitors (only defined for goods sectors) are the main other exporters to the markets defined as the mostattractive ones, or the main exporters on the world market, where such information was not available.No attractive markets were identified for IT services, health services and hydropower. The following tableshows a summary for all sectors except these three.* It should be noted that the index can be higher for a country A than for a country B, even though both apply the same tariffs to imports (e.g.because A and B are members of a customs union). This is the case because A and B may import from different countries, to which the customsunion applies different tariffs. If, for example, Spain imports mostly from China (high tariff), and France mostly from Italy (zero tariff), then theresulting index for Spain and France will be different, even though both belong to a customs union.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT297