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Sustainable trade

Sustainable Trade Index 2016


Published 18 April 2016

Trade has been indispensable to the development of Asia’s most successful economies: those at the top of the 2016 Hinrich Foundation Sustainable Trade Index (Singapore, South Korea, Japan, Hong Kong and Taiwan) are proof of the remarkable power of trade in lifting people out of poverty. The hope of the poorer economies in the region is that they can follow a similar development model to top performers, moving from low-value added manufacturing into the production and export of higher-value technology and services.

Key findings

  • Singapore tops the overall ranking, followed closely by South Korea. Trade has been central to
    Singapore’s development and no other country can match the benefits it has delivered to its citizens over the past 50 years across all three pillars
  • South and Southeast Asia’s poorer countries, including Bangladesh, Myanmar and Pakistan,
    rank at the bottom. Each of these countries has the potential to trade more sustainably, but are held back by a variety of factors, such as lack of export diversification or a failure to develop human capital
  • Myanmar, having only recently opened its economy, is in many respects a “blank slate” in this area and is perhaps in a position to learn the most from the index findings
  • Sustainable trade tracks closely with wealth. Unsurprisingly, rich countries top the index, middle income countries fall in the middle, and low income countries make up the bottom
  • A number of countries do over- or underperform relative to income. Three countries, South Korea (+4), Vietnam (+3), and Cambodia (+3), over-perform relative to where they rank in terms of per capita GDP. China (-3) is the most notable underperformer, scoring poorly on the environment, but also the sustainability of its labour force and in educational attainment
  • The countries scoring best on the economic pillar of the index trade in a manner that enables them to withstand internal and external shocks and that balance long-term resilience with short-term goals. They have low barriers to trade, a diversified export mix, open current accounts, and invest in technology, among other traits. The Asian Tigers - Singapore, Hong Kong, South Korea and Taiwan - scored highest on the economic pillar. Malaysia is the best performer from emerging Asia, tying with Japan for 6th in this category
  • The countries scoring best on the social pillar have lower inequality, high levels of educational attainment, strong labour standards, and are politically stable. South Korea and the US rank at the top, while the Philippines registers a significant underperformance as a result of its high inequality, poor education, and weak labour standards
  • The countries scoring best on the environmental pillar avoid over-reliance on natural resource exports, limit pollution and have low carbon emissions in trade, and pursue high-environmental standards in international and regional agreements. Not surprisingly, China and India are both in the bottom quartile of this pillar, scoring poorly on water and air pollution, in particular

Country reports

The STI 2016 also includes an in-depth breakdown of a country's performance on the Index.

Access different country reports and all STI 2016 materials here.

1st Singapore   11th Vietnam
2nd S.Korea   12th China
3rd Japan   13th Philippines
4th USA   14th Indonesia
5th Hong Kong   15th India
6th Taiwan   16th Cambodia
7th Malaysia   17th Laos
8th Thailand   18th Bangladesh
9th Brunei   19th Pakistan
10th Sri Lanka   20th Myanmar

 

Moving forward

The key message of the index is that while trade is an indispensable ingredient in economic development, it cannot be sustainably pursued without responsible environmental stewardship and a commitment to fully developing social capital. Countries which come up short on the environmental and social pillar will be unable to continue to trade successfully over the long term, less attractive destinations for critically needed foreign direct investment, and less able to secure funding and support from multilateral development agencies. 

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