CEPII, Recherche et Expertise sur l'economie mondiale
Market Potentials

Market Potentials offers six distinct indices of proximity to world markets for more than 150 countries from 1960 to 2009.

Since the early 1990s’ international trade analyses has emphasized how proximity to large markets determines economic development and shapes international trade patterns.

CEPII’s Market Potential database reports the two measurements of market potentials synthesizing the evolution of countries’ economic geography. The database contains 6 distinct measures of Market Potential for a very large set of countries (between 152 and 205, depending of the year) from 1960 to 2003.

A companion dataset offering market potentials at industrial level (27 industries) and covering a more limited period (1980-2003) is also available (rmp_ind.dta). It is based on TradeProd, a CEPII dataset matching trade at 3-digit ISIC Rev 2. The advantage of industry-specific market potentials is to present a more detailed picture of the evolution of countries’ economic geography .
 Methodology: a Short Description
Building on New Economic Geography models, empirical analyses have proposed meaningful estimates of each country’s proximity to world markets, usually labeled Market Potential. Redding and Venables (Journal of International Economic, 2004, 62: 53-82) estimate an indicator of market potential as a sum of expenditure of all countries in the world, weighted by bilateral trade costs. Head and Mayer (The Review of Economics and Statistics, 2004, 86(4): 959-972) propose a related but alternative methodology, adjusting the market potential measurement to take into account the impact of national borders on trade flows.


Reference document to mention
Mayer, T. (2008)
Market Potential and Development
CEPII Working Paper 2009-24

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 Person in charge
Thierry Mayer