| Summary: | The rapid integration of emerging market economies (EMEs) into world trade over the past three decades has raised widespread concerns about the effects this is having on trade-exposed sectors in advanced OECD countries. An analysis of international trade patterns of over 4000 products between 1995 and 2015 shows that the export product overlap between advanced OECD economies and EMEs has been increasing. However, the product overlap between advanced countries is still higher and increasing faster, suggesting that competitive pressures in export product markets on advanced economies is mainly coming from other OECD members. Regression analysis corroborates this finding, supporting the idea that competition from EMEs remains relatively moderate. Regression analysis show that a move to specialise in a product by the United States exerts about twice as much competitive pressure as a similar decision in China. However, competition effects on average are small compared to changes in world demand as drivers of country competitiveness at the individual product level. The negative effect of a one standard deviation decrease in world demand for a product exerts 8 times more pressure than a one standard deviation increase in specialisation of the United States for that product. In short, specialising in what the world wants to buy remains the key for export performance
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