Distribution of World Wide Exports of Medicines in 2019
Have you ever wondered where does your medicines comes from? Who else consumes the same medicines as you do? Well, I did!
The question emerged from this article that visualizes the total exports and each country’s share in world-wide medicine exports. I am, however, taking a different angle to see how concentrated is the import market for the medicines exported by each country.
About the data:
I sourced the 2019 dataset from Trademap for my analysis. The dataset contains 9 different export related variables for 207 countries. I am using 3 variables -
- Exporters [values]: Export Country names.
- Share in world exports (%): Share of each country in worldwide exports for 2019. There were 155 countries having zero share in exports. Thus, these countries were removed to reduce noise, thereby leaving 52 countries for accurate analysis.
- Market concentration: It represents the distribution of medicines exported to various countries. In simple words, market concentration approximately indicates the number of countries a medicine is exported to and their respective share in the market. If a medicine is exported to few countries, then the market for that medicine is heavily concentrated. On the other hand, if a medicine is exported to large number of countries then it is said to have a lower market concentration. The concentration index is ranged between 0 and 1. Higher index indicates that exports are made to fewer countries whereas lower index indicates that exports are made to many countries. For example, medicine exports from Denmark have a market concentration of 0.74. This means Denmark exports medicines to fewer countries. On the contrary, medicine exports from Germany have a market concentration of 0.07. This means Germany exports its medicines to larger number of countries.
Analysis:
As mentioned before, I wanted to analyze the diversity of the market concentration vis-a-vis total share by each exporting country. Hence, I decided to run a linear regression model between market concentration (dependent variable) and world share (independent variable).
A linear regression line has an equation -
y = bx + a
where,
x = independent variable
y = dependent variable
b = slope (represents the rate of change in y as x changes)
a = intercept (the value of y when x = 0)
I am specifically looking at the slope to draw conclusions.
So, plotting the regression line.
In this graph, you can see downward line which implies negative relationship between world’s exports share and market concentration. To explain further, for every one percent increase in world’s export share there is a decrease of 0.003 index in market concentration.
As mentioned before, higher index indicates that exports are made to fewer countries whereas lower index indicates that exports are made to many countries. So, the goal here should be to reduce concentration index as the countries are increasing their exports. This thesis is confirmed with our analysis above.
But there is a catch here!
Overall, the results are exactly the way it supposed to be i.e., decrease in market concentration with the increase in exports share. But let’s go a step further, dissect the data based on exports share and see if the results are same.
I divided the data into 2 cluster groups –
a) Large exporters — Countries with world’s exports share more than 5%, and
b) Small exporters — Countries with world’s exports share less than 5%.
Linear regression models for both cluster groups are as follows –
*The orange color represents large exporters and blue color represents small exporters
You can see the results are quite opposite of what we have seen before. In this graph, you can see the upward direction which implies a positive relationship between exports share and market concentration. For every one percent increase in world’s export share there is an increase of 0.0006 (large exporters) and 0.0316 (small exporters) index in market concentration.
As I mentioned before, the goal here should be to reduce concentration index as the countries are increasing their exports. However, in the second analysis, we see that both export share and market concentration are increasing. It means countries are exporting medicines in larger amounts but to fewer countries.
Further, the small exporters have higher market concentration when compared to large exporters. This means the small exporters are extending their exports to limited countries.
A comparison of results in the above two scenarios is as follows -
Conclusion and takeaway:
Overall, the market concentration is low for exported medicines. This means the medicines exported are fairly distributed among its importers. However, if we segregate the countries to large and small exporters, the market concentration tends to increase with the increase in export share. It means that the exported medicines are distributed to fewer countries.
Further, the large exporters fairly distribute their medicines to the whole world. However, small exporters exports to limited regions. This is a matter of concern as the fate of these small exporters are dependent on those limited importers. One way of reducing such dependency is promote export diversification. This research paper explains beautifully the interaction between export dependence and export concentration, and ways to reduce export dependency.
Now that you know how medicines travel around the world, visit my interactive dashboard to see how medicines have traveled to your country.
Note:
All the datasets and code are uploaded here in GitHub.
References-
1. https://en.wikipedia.org/wiki/Market_concentration
2. https://datacatalog.worldbank.org/import-product-concentration-index
3. https://unctadstat.unctad.org/EN/IndicatorsExplained.html
