A First Step to Identifying Underserved Foreign Markets

We describe a first step for identifying foreign markets that may be candidates for export expansion. The method compares export data to the amount of exports predicted by the gravity equation. We estimate four sets of gravity equation coefficients and use both in-sample and outof- sample predictions. To illustrate our method, we use data from Washington agricultural industrial groups. We find many markets, particularly those in Europe, that are currently underserved by Washington agricultural exports, often by large amounts. We also identify overserved markets that can be further studied to provide lessons on what works for increasing exports.