Sovereign Analysis Metric: TAPG

After a video posted by the Captain a while back about what options were available if you wanted to bug out of the good ol' U S of A in the event of a catastrophic collapse.  The Captain mentioned sovereign analysis as one measure of determining whether or not a country would be a wise place to go to.  I have my own opinions on the viability of 'bugging out' but they general feelings based off of observation rather than firm opinions based on evidence.  That being the case it gave me an idea for another project.  Yes I know I still haven't finished my posts about the Fall of the Roman Republic and it's relations to the United States today, I have a lot of these projects that are halfway through. But that is the nature of the beast, you have to have a lot of pots on the fire lest you run the risk of running out of ideas or things to do. I plan on doing my own Sovereign analysis on a few of the worlds nations. I plan on looking at the United States, the BRIC nations, a few other major developed and developing economies, and examine the resources, their economy and how connected they are to the global system. I don't anticipate this project finishing anytime soon, so you might ask why I am posting on a project not yet even begun, it's because I came up with something that I think might be useful.

While this metric may not be unique, and I don't assume to be the first person to have come up with this idea, I do think this metric will be useful.  The metric I speak of is something I call TAPG, which stands for Trade Activity as a Percent of Gross Domestic Product.  Trade activity is nothing more than the sum of imports and exports of a nation's economy and by dividing it by a nation's GDP I believe it will give us an idea on how dependent, or intertwined we could say, that a country is on the global economy and world trade.

For example, the US has imports and export activity totaling 3.79 trillion dollars with a GDP of 15 trillion. This would make TAPG at 25%.  For China, which has total export and import activity of 3.7 trillion, and a GDP of 7.3 trillion. This would give them a TAPG of 50%, which means that China is more dependent on the global economy and world trade than the United States.  Now this metric isn't intended to be all end all when it comes to analyzing a nation, just one aspect of it.  Just because the US has a TAPG lower than China doesn't necessarily mean that China is in worse shape than America, but it does indicate that one country is more reliant on the globe than another.  And in this makes sense, the US is less reliant on the globe than China. Now before some one takes off my head and tells me that how could I ignore the massive amounts of debt that the US has and it's reliance on the sucker ofs the world purchasing said debt; I am not. This metric isn't meant for that, it simply is a metric in regards to trade. And the fact is, that the US is less dependent on trade than China, it has a more developed economy, more resources and a larger consumer base.

But that being said, I wanted to test my metric out and see if it had validity, or if it was widely off.  Here are some back of the page calculations I did for various nations and their TAPG to test my idea. It is shown from low to high:

• Brazil 23%
• USA 25%
• Japan 27%
• Australia 37%
• Russia 46%
• India 47%
• Mexico 48%
• China 50%
• Canada 50%
• South Korea 85%
• Switzerland 103%
• Singapore 220%

All and all I can say that the ratio is looking like it does a pretty good job.  Now you might say, wait a second, some things look wrong here. For example Singapore has a TAPG of 220% and how can a country have a TAPG higher than it's economy? Or your may even wonder how a developing nation like Brazil could have such a low TAPG? Or you might look at Canada and wonder how it can have a TAPG the same as China?   All of these items are easily explainable.

Signapore generates more in exports than it's entire GDP, it's very impressive actually, however, they also import almost as much as their GDP. Immediately it should become very apparent that a nation that has export and import levels above or very close to it's GDP is very, very dependent on world trade' hence, it has a extremely high TAPG.

Brazil's economy has long focused on self-reliance and it is very inwardly focused. There are a lot of reasons for this, even geopolitical ones, but this inward focused has resulted in an economy that is not very dependent on the globe. Does this mean that they won't be hit hard by the next wave of crisis? Not necessarily, but a low TAPG does lead me to believe that they might fare better than others. But a deeper analysis would be required.

Lastly, there is Canada, which is a developed nation with an abundance of natural resources. Why would they have a TAPG as high as China's?  It has a lot to do with who they are neighbors with. Canada is a very small economy and a lot of trading goes on between Americans and Canadians. 73% of all of  Canada's exports go to America, they are our largest oil exporter, and 49% of all their imports come from America.  Needless to say Canada is very intertwined with America, which means if America goes it is bringing Canda with it.

The last example I gave shows a deeper level analysis that is required when using TAPG. While the ratio may explain which nation is dependent on world trade, it will take a closer examination to see where exactly a country is the most vulnerable in this interconnected economy that we live in. As we can see with Canada, the state of Russia has less of an impact on their economy than the state of America. 

This is just one of the many metrics I plan on using when analyzing my selected nations. And I may come up with new ones in the future. If you have any that you think might be useful, for example the Captain says that the GDP/GNP are important, then please let me know.


ADDENDUM

This isn't based on any statistical or regression analysis, but based off of my readings of world economies here is how I would rate TAPG ratios using my gut.

Anything less than 30% would be considered Green. A nation with 30% or less of economic activity related to imports and exports has a large enough domestic economy to help it through any major interruptions to the global economy. Now this might seem odd, considering that Japan is extremely dependent on the rest of the world for oil and liquid natural gas, but Japan does have the economic base to develop alternative energy sources. Doesn't mean it wouldn't be expensive, or disruptive, it would. But it has the industrial ability to do so.

Anything less than 50% would be yellow. These are economies that do have risk, however, this risk may be regaled to only a few nations. For example Canada's economy and America's. Or their economy may not be fully developed enough to develop alternative markets or energy sources as quickly as a more developed nation, such as China. 

Anything over 51% but less than 100% is Orange.  These nations are exposed to the ebbs and flows of the global economy. They may have an economy that is very export oriented, a lack of natural resources and underdeveloped domestic forms of alternative energy, or their country may be very poor.

Anything over 100% is Red. These are countries that are extremely exposed to the ups and downs of the global economy. Most likely these nations are very small or are city states and have no choice but to rely on the global market for economic production and energy acquisition. If they are not, then they have an economy that is severely lacking in either certain industrial or energy producing sectors


Additional Countries I looked at

Turkey: 30%
Argentina: 31%
Costa Rica: 40%
Philippines: 42%
Indonesia: 42%
New Zealand: 45%
Panama: 52%
Chile: 61%
Germany: 68%
Malaysia: 130%