Export Similarity Index

After previous post about Export Diversification Index , now I would like to discus shortly about Export Similarity Index.

Many countries have an unusual pattern of export specialization in relation to the rest of the world. Often, some product exports, typically manufacturing, have grown more rapidly than the average of world exports. It is not clear however to what extent these results reflect a common tendency among countries and to what extent the results are driven by the performance of individual countries. The export similarity (XS) index provides useful information on distinctive export patterns from country to country. It is defined as:

XS j,k = sum [min (Xij, Xik) * 100]

Where Xij and Xik are industry i’s export shares in country j’s and country k’s exports, which usually include a group of countries or competitors. The index varies between zero and 100, with zero indicating complete dissimilarity and 100 representing identical export composition. This measure is subject to aggregation bias (as the data are more finely disaggregated, the index will tend to fall) and hence embodies certain arbitrariness due to product choice.

Source : worldbank.org