Policy Study 02/2018

Diversification of Belarusian Exports: The Potential of Machinery Exports on Non-Traditional Markets

Belarus is an open economy, with exports exceeding 50% of GDP. Within the basket of export goods, machinery and equipment exports play an important role. In 2017, they amounted to USD 5.3 bn, which implies a share of 18% in total goods exports. Vehicles are the largest category of Belarus machinery exports, accounting for 43% of total. This includes vehicles for the transportation of goods, tractors and motor cars. However, the geographical structure of machinery exports is – in line with the overall export structure – highly concentrated. Belarus’ traditional export destinations are the Eurasian Economic Union EAEU (including the Russian Federation), the CIS (outside the EAEU) and to some extent the EU. Taken together, these markets absorb a whopping 93% of Belarusian machinery exports.

The diversification of exports to new, especially non-traditional, markets is therefore of key interest to policymakers, as this would stimulate economic growth and reduce the volatility of the economy, especially its exposure to external shocks. In this paper, we used the export potential analysis methodology to study the potential of Belarus’ machinery exports to such non-traditional markets, i.e. markets other than those mentioned above. Our analysis was performed in two stages. In a first step, the Top-20 Belarusian machinery products were selected based on their export performance (e.g. value, growth, revealed comparative advantage) and the absorption capacity of the non-traditional markets as a whole. In a second step, for each one of the Top-20 products, a separate analysis was performed to identify the Top-10 countries featuring the best combination of import value and dynamism of the destination country as well as its proximity to Belarus and import duties applied.

Our results show that Belarus should target the markets of Turkey, other Middle East countries (Israel, Jordan, Bahrein, and Qatar), some smaller European countries (Iceland, FYR Macedonia), Mediterranean Africa (Morocco, Tunisia) and South Asia (Pakistan, China) primarily. The analysis of the current export patterns of the Top-20 products suggests that these markets play a very small role in Belarus’ exports as of today, while they are large and growing importers of machinery products. Export promotion activities should therefore be focussed on the key target markets in these regions.

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