What is the Balassa index?

The Balassa index measures the degree of specialisation of Dutch export products. If the Balassa index for a product is more than 1, it means that product involves specialisation. If it is less than 1 it means that no specialisation is involved in the product. The Dutch export of a given product is compared to the export of that product by the EU-15 excluding the Netherlands.

For example, the Balassa index for cereals in the year 2009 is calculated as follows.

Export of cereals by the Netherlands: 397 million euro
Total export of the Netherlands: 309,359 million euro
Export of cereals by EU-15 excluding the Netherlands: 9,916 million euro
Total export by EU-15 excluding the Netherlands: 2,572634 million euro

The Balassa index equals

(397 million / 309,359 million)
------------divided by----------- = 0.3
(9,916 million / 2,572634 million)

The outcome is 0.3 so it is less than 1 which means that the Netherlands has noexport specialisation for the export product cereals compared with the EU-15 member states.