Measuring Singapore's Reliance on External Demand

The conventional measure of external reliance of an economy is the ratio of exports to total demand. In Singapore, this measure suggests that our external reliance is high (74 per cent).However, this measure is an overstatement, as it does not factor in the high import content of exports.

We calculate an alternative measure of the share of external demand in our economy, proposed by Kranendonk and Verbruggen (2008), to adjust for import content. This import-adjusted measure suggests a significantly lower (56 per cent) reliance on external demand in Singapore, and reduces the disparity between Singapore's external demand reliance and that of other countries.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore.

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