Conventional wisdom is economic prosperity and high GDP are best achieved with large domestic markets and anecdotal evidence (the British Empire, the U.S. and now China) seems to support this. But is it always the case?
Visual Capitalist has come out with a graphic that would appear to challenge this assumption by presenting a world map where a country’s representation is sized by its annual export trade. While the usual suspects such as China (with Hong Kong), Germany, Japan and the U.S. are all featured, what is noticeable is the representation of countries with relatively smaller populations and by extension, domestic markets. Countries like Switzerland, Singapore, and the Netherlands all score very highly in terms of international trade compared to their populations. Whether it is coincidence or causation, these countries also tend to have very high GDP levels per capita.
Having a large domestic market in which to scale up in may be an advantage but perhaps fostering an open, innovative trade-based economy matters even more. Yet another reason to defend and promote an rules-based open economic order and continue to reduce tariffs, quotas and other artificial barriers to trade.