THE FEITORIA PRIME MARKET MODEL : A CASE STUDY OF BILATERAL TRADE OPPORTUNITIES PORTUGAL-POLAND

The paper aims to present the strategic management model for economic development, the Feitoria Prime Market Model (FPM). The FPM identifies new markets and new products for enterprises to export their products. FPM is based in the comparative advantage concept of Ricardo (1817) and incorporates economic and political dimensions in order to avoid unstable economies. The study present a particular case, Portugal-Poland, that has the objective to find bilateral trade opportunities. The methodology presented below is configured confronting the potential trade to effectively verified among the countries and uses a trade database 2012-16 period from the UN COMTRADE free database.


Introduction
The instability of the global economy and the governance of countries, led to take a qualitatively different approach to economic development and find new more effective strategic management model that incorporate these dimensions.Basically, strategic management refers to a systematic effort to establish organizational purposes, objectives, policies, and to develop the strategies which will be used to achieve the organizational purposes (Steiner, 1979).Recently, strategic management has been emphasized by policy makers and public managers at all levels of government (Bryson & Edwards, 2017).
The theories of international trade consolidate the idea that there are gains when different regions are related: a developed export sector is capable of having high impacts on the generation of jobs and income, as well as on the distribution of wealth in the population; on the import side, it is possible to generate welfare gains when a greater variety of products are available to be consumed; with regard to international relations in the financial system and in the flow of labor, it facilitates the entry of valuable productive resources into the country.As Galvão (2000) explains, international trade ceased to be a simple possibility of exporting productive surpluses; nowadays it has an important role for growth and for the improvement of economic well-being.

12
In 1989 the democratic transition in Poland began and changed the foreign policy of the country that depended entirely on the Soviet Union.The commercial relations between Portugal and Poland increased significantly since Poland integrated the European Union in 2004.In 2001 the bilateral trade between Portugal and Poland was around 415 million € and in 2016 was around 1.304,8 million €, representing an increase of 314%.
In 2016 Portugal exported 573 products to Poland (of a total of 1.252 products).In 2016, compared to 2012, the exports from Portugal to Poland had growth 7,5% to 575,6 million € (more than the exports to the World: 2,2%).The 24 larger products in value represent 60,5% of total products exported (table 1).

Methodological aspects
The comparative advantage concept, proposed by Ricardo (1817), is one of the most used models both in the classical and neoclassical theories.According to Ricardo's theory, a country will benefit if it specializes in the production of goods whose manufacture is intensive in its abundant resources.Thus, in developing countries where the reserve labor force is very large owing to open or disguised unemployment (Myrdal, 1956;Prebisch, 1959), best results can be achieved by specializing in the production of labor-intensive goods.
Vaillant & Ons (2003), Xavier et al. (2008) and Xavier (2009), use the comparative advantage of the exporter and comparative disadvantage of the importer crossed, through the so-called Index of Complementarity (IC) in conjugation with the Index of Effectiveness Commerce (EC), with the aim of confronting the potential trade of two regions against what was actually observed in a given period.
To identify trade potentials is used the Index of Complementary (IC).The indicator analyzes crossover between supply and demand for the products under study, taking in account the world context, that is, the comparative advantages of the exporter and the comparative disadvantages of the importer (Vaillant & Ons, 2003).The indicator is as follows: When IC > 1, there is complementarity between the two; below this value, there isn´t trade potential between i and j.
In order to compare the results of complementarity to the trade actually carried out between two partners, the Index of Effectiveness Commerce (EC) is used.
where: i, exporting region; j, importing region; W, all regions of the world; s, sector considered in the analysis; s ij X , exports, for each sector s, from i to j;  s s ij X , total exports from i to j; s ji M , imports, for each sector s, of j from i;  s s ji M , total imports of j from i; s iW X , exports, for each sector s, from i to the world;  s s iW X , total exports from i to world; s jW M , imports, for each sector s, of j from the world;  s s jW M , total imports of j from the world.
According Xavier (2009): i) for a given sector s, if the value of EC is greater (smaller) than the unity, then the effective trade from i to j would be beyond (below) the average expectations and ii) for a given sector s, if the value of EC is equal to the unity, then the effective trade from i to j would only reflect the average expectations.
The main use of this index is the comparison with the Index of Complementarity (IC).For a given sector s, is expected that the result of EC>1 is compatible with the existence of complementary between regions i and j (IC>1).On the other hand, it is also expected that, for given sector the result of EC<1 is compatible with the non existence of complementarity between i and j (IC<1).
When EC>1 and IC<1, it means that, exceeding average expectations in an environment of non-complementarity between i and j would indicate that the sector s showed 15 a trade surplus.On the other hand, if EC<1 and IC>1 there is complementarity between i and j but the sector s should demonstrate better commercial performance, which was not observed.So the sectors with opportunities to exploit are when IC>1 and EC<1, that is, those sectors that do not take advantage of the complementarity existing between i and j, being the identification of these opportunities the main objective of this article.
The Feitoria Prime Market Model incorporates seven dimensions: the Ease of Doing Business1 , the World Governance Indicator 2 , the Credit Rating 3 , the comparative advantage concept, the size (amount of trade), the dynamism (given by growth of trade, express by CAGR -Compound Annual Growth Rate) and the Free Commerce (free merchandise of any kind of embargo -political, religious, etc).
Based on UN COMTRADE free database, it was possible to implement an analysis of the general characteristics of export products from Portugal to Poland and vice-versa.The database refers to 2012-16 period and it was used the Harmonized System 4 (HS four-digit code).The structure of therefore comprises 97 chapters which, in turn, can be disaggregated into 1,254 four-digit level -for example, Chapter 01 can disaggregated into six subsectors, which are characterized in codes from 0101 to 0106, Chapter 02 can be disaggregated into ten subsectors, which are characterized in codes from 0201 to 0210.

Results
The confrontation of the Index of Complementarity (IC) and the Index of Effectiveness Commerce (EC) indicates under exploit sectors in trade relations between Portugal and Poland.The evaluation of the existing potential is given by Index of Complementarity (IC), if IC>1, the two regions studied would be complementary, that is, the two regions have potential to trade relations and then the Index of Effectiveness Commerce (EC) indicates the 16 effectiveness of trade: first the potential sectors are selected, i.e., those with index IC>1, and then, among the potential sectors, those with EC<1 are taken, i.e., those that would not have effective trade.

Export Opportunities from Portugal to Poland
Based in Feitoria Prime Market Model there are 126 export opportunities (table 3, where is shown only the TOP10) sorted by value of Poland imports from World (largest to smallest) and they are complemented with the imports dynamism (the average growth rate in medium term, 2012-2016, and short term, 2015-2016).17

Conclusions
The commercial relations between Portugal and Poland increased from 415 million €, in 2001, to 1.304,8 million €, in 2016, which represents an increase of more than 300%.
In the period 2012 -2016 the average growth of exports from Portugal to Poland (7,5%) and from Poland to Portugal (10,6%) was higher than the average growth of exports to World (Portugal to World: 2,2% and Poland to World: 4,9%) which means that the bilateral trade among Portugal and Poland had strengthened.
In 2016, 60,5% of the total exports Portugal to Poland were concentrated in 24 products and 61,2% of the total exports Poland to Portugal were concentrated in 16 products.
As concerning bilateral trade opportunities, the FPM finds 126 export opportunities from Portugal to Poland and 134 from Poland to Portugal.
The present study may contribute to economic stability by choosing economies with better economic and political conditions for trading and by formulating policies in order to take advantage of the potential products for trading described.Support to the exports should be mainly focused on the following aspects: Promotion of articulation between state, institutes and enterprises, developing trade agreements; Favorable tax policy for exporting companies; Expansion of the credit for investment in modernization of enterprises; development of transport, communication, energy, water and other infrastructure relevant to business development; Simplification of export formalities; Creation and restructuring of productive centers.Surely that this can't be done in one day but it is really desired to have better conditions to exports.
i, exporting region; j, importing region; W, all regions of the world; s, sector considered in the analysis; s iW X , exports, for each sector s, from i to the world;  s s iW X , total exports from i to the world; s jW M , imports, for each sector s, from j of the world ;  s s jW M , total imports from j of the world; s WW M , total world imports, for each sector s;

Table 2 Top 16 larger products in value exported from Poland to Portugal Value in 2012 Value in 2016
4205 -Articles of leather or composition leather (excluding saddlery and harness bags; cases and ... 9403 -Furniture and parts thereof, n.e.s.(excluding seats and medical, surgical, dental or veterinary ... Source: COMTRADE, Feitoria Prime Market Model.Unity: thousand EUR.CAGR: Compound annual grow th rate.