1. Sustainable Trade Index 2018
23 November 2018
Stephen Olson
Hinrich Foundation Research Fellow

2. Topics for Today
Context for this year’s Sustainable Trade Index
What do we mean by “Sustainable Trade”?
How did we construct the STI?
Results from the 2018 STI
Key themes & policy implications

3. The context in 2018
Rising protectionism & the risk of full-out trade war
Global trade system in tatters
Fraying social stability, attributable to real or perceived impacts from trade
Environmental degradation

4. Defining Sustainable Trade
Sustainable trade Engaging in international trade in a way that not only generates balanced economic growth, but also strengthens social capital and provides for environmental stewardship.
Although 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
Based on UN Brundtland Commission
3 pillars: economic, social & environment

5. Creating the STI
Evaluates 19 Asian economies + USA across the 3 pillars
Process
Produced by EIU, based on literature review, expert consultations & workshops
Indicators structure
14 indicators under economic pillar
4 under social
6 under environmental
All pillars & indicators equally weighed
Hong Kong
South Korea
Singapore
Japan
USA
Taiwan
Sri Lanka
China
Vietnam
Philippines
India
Malaysia
Thailand
Indonesia
Brunei
Pakistan
Bangladesh
Laos
Cambodia
Myanmar

6. Overall results
Broad regression in sustainable trade
Most notable among richer economies
Improvements in economic pillar offset by backsliding on social & environmental
Top performer Hong Kong was a bright spot
Technological infrastructure and labor force
Steady increases in educational attainment, political stability
Several middle income countries performing well

7. Overall results

8. Over-performers & under-performers
Various indexes tend to correlate with levels of income
Over / under-perform an alternative measure
10 economies over-perform
6 underperform
USA underperforms by 4 places

9. Vietnam’s performance: Change in scores from 2016
Social pillar
Change
Economic pillar
Change
1.1) Growth in per capita GDP
1.2) Current account liberalisation
1.3) Tariff & non-tariff barriers
1.4) Exchange rate volatility *
1.5) Financial sector depth
1.6) Foreign trade and payments risk
1.7) Export market concentration
1.8) Export product concentration
1.9) Foreign Direct Investment
1.10) Gross fixed capital formation
1.11) Trade costs *
1.12) Technological innovation
1.13) Technological infrastructure
1.14) Growth in labour force *
2.1) Inequality (Gini coefficient)
2.2) Educational attainment
2.3) Labour standards
2.4) Political stability
Improving
Negligible
Backsliding
Environmental pillar
Change
3.1) Air pollution
3.2) Deforestation
3.3) Water pollution
3.4) Environmental standards
in trade *
3.5) Transfer emissions *
3.6) Share of natural resources
in trade

10. Important themes and policy implications
Sustainability drives competitiveness
Important for FDI
Companies taking more leadership
Sustainability codes of conduct, audit procedures, company to industry wide initiatives
Profound shift over past 20 years
Trade sustainability is NOT just a luxury for wealthy countries
Low and middle income countries embracing sustainability

11. Sustainable Trade Index 2018
Vietnam Chamber of Commerce and Industry
#SustainableTradeIndex
23 November 2018
Hanoi, Vietnam