DP20855 The Economic Value of Nations (for Others)
What is the economic value of a country to others through trade, relative to the gains it secures for itself? To answer this question, we introduce, characterize, and compute the trade benefit ratio (TBR) – a new metric capturing the ratio of value created for trading partners to that created domestically. TBR also reflects a country’s capacity to impose harm on others relative to self-harm, positioning it as a potential measure of geopolitical leverage. Extending a nonlinear quantitative general equilibrium model spanning 34 countries/regions and 38 industries, we compute and rank TBRs for overall trade, manufacturing, and manufacturing plus services. In an all-sectors exercise, the highest-TBR countries are the US, the UK, China, and Indonesia, whereas Japan and South Korea lie at the bottom. In a manufacturing-and-services scenario, the US TBR even exceeds one. We extend the framework to coalitions, demonstrating its relevance in a “Cold War 2.0” scenario of Western-China bloc decoupling.
