The Hinrich-IMD Sustainable Trade Index 2022
Sustainable Trade Index
The IMD World Competitiveness Center and the Hinrich Foundation combined their expertise in 2022 to build the Hinrich-IMD Sustainable Trade Index to stimulate discussion among policymakers, business executives, and civil society leaders striving to advance sustainable and mutually beneficial global trade.
The Hinrich Foundation is a unique Asia-based philanthropic organization that works to advance mutually beneficial and sustainable global trade. It believes sustainable global trade strengthens relationships between nations and improves people’s lives and supports original research and education programs that build understanding and leadership in global trade. It prides itself on taking an approach that is independent, fact-based, and objective, and on being an authoritative source of knowledge, sharp analysis, and fresh thinking for policymakers, businesses, media, and scholars engaged in global trade.
The Hinrich-IMD Sustainable Trade Index measures a country’s readiness and capacity to participate in the international trading system in a manner that supports the long-term goals of economic growth, environmental protection, and societal development.
While global trade has helped lift hundreds of millions of people around the world out of poverty, the benefits do not come without risks. If an economy is unprepared for the consequences of trade growth, it may result in labor disruption, environmental degradation, and worsening inequality. However, proactive and responsible government policy and farsighted corporate decision making can harness the positive elements of trade while mitigating the negative, making for a more robust global trading community.
Methodology
The Hinrich-IMD Sustainable Trade Index measures 30 economies’ readiness and capacity to participate in the global trading system in a manner that supports the long-term goals of economic growth, environmental protection, and societal development.
It does so via 70 indicators (pieces of data) from a wide variety of sources (each cited), which are then grouped into three pillars:
The Economic pillar
This measures an economy’s ability to ensure and promote economic growth through international trade. In this category, economies receive scores for indicators that demonstrate a link between the trading system and economic growth.
Some indicators capture the quality of trade infrastructure, while others measure the ease of conducting international trade, such as current account convertibility, exchange rate stability, and trade costs associated with cross-border transactions.
We measure export diversification by evaluating an economy’s bilateral trade destinations and how heavily its exports are concentrated by sector – because economies with diversified export markets and products are better equipped to absorb external economic shocks.
Furthermore, we consider the technological infrastructure and innovation capabilities of an economy by assessing its emphasis on research and development investments and digital technologies, which are key drivers for the production of sophisticated and sustainable goods and services.
The Societal pillar
Social factors matter in an economy’s capacity to trade internationally over the long term. Economies are measured on the environment that encourages and supports the development of human capital, such as the extent of education and labor standards.
This pillar also captures factors that influence public support for trade expansion. These include income inequality, political stability, goods produced by forced and child labor, and governmental response to human trafficking.
The Environmental pillar
This measures the extent to which an economy’s trade supports sustainable resources. The factors include measurements of non-renewable natural resources in trade and the management of externalities that arise from economic growth and participation in the global trading system.
While an economy’s capacity to participate in the global trading system is dependent on economic development, achieving sustainable trade requires prudent stewardship of natural resources and limiting externalities in an economy’s economic calculus to promote its overall environmental capital.
The indicators in this section measure an economy’s environmental capital and include indicators for air and water pollution. In terms of future impact, we measure national environmental standards, carbon emissions, and share of natural resources in exports.
We have added new indicators and updated other components to further refine the index from prior iterations.
For more on data preparation and data processing, please download the full report in the link below.
Results
Overall STI
1.01. Consumer price inflation
Includes the overall and pillar results and granular detail on all 70 indicators
Full report
The full report contains an expanded version of the above information.
