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Definition: Rate of penetration

The rate of penetration for a country C and a product P is the share of domestic demand in country C for product P which is met by imports. An increase in rates of penetration could indicate a declining capacity of domestic (generally understood as "national") enterprises to compete with foreign suppliers. A decreasing rate of penetration may result from improved competitiveness of domestic suppliers (with import-substitution) or from investments (or technology transfers) from foreign companies into the domestic economy.