Abstract

The authors investigated inter-sectoral comparative advantage of Seychelles. The sector with the highest inter-sectoral comparative advantage is the Animal and animal products sector followed by the miscellaneous sector. Least is the raw hides, skins, leather and furs sector with no comparative advantage at all. The products that dominate the animal and animal products sector are various types of fish or sea products. However, the top two sectors do have very few products which have demonstrated to have comparative advantage. In general, inter-sectoral comparative advantage in Seychelles is very limited. It is recommended that Seychelles should come up with sectoral strategies to boost comparative advantage. There is a need to diversify from fish products to include other products. Seychelles should also encourage inward foreign direct investment specifically from multi-national firms which can bring in technology and improve on comparative advantage.

Highlights

  • Most studies on comparative advantage have focused on identifying revealed comparative advantage (RCA) in products only

  • This paper investigates inter-sectoral comparative advantage of Seychelles

  • The justification for this paper is that Seychelles is a member of both the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) making Seychelles’s economic and trade indicators important to these regions

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Summary

INTRODUCTION

Most studies on comparative advantage have focused on identifying revealed comparative advantage (RCA) in products only. Heckscher-Ohlin-Samuelson Theory attributes comparative advantage to existence of factor price differentials. Other theories such as the NeoFactor-Proportion Theory emphasize the efficiency of factors while the Technology Gap and Product Cycle Theory focuses on technological progress as determinants of comparative advantage (Bender and Li, 2002). Mzumara (2006) attributes comparative advantage from the extension made by Heckscher-Ohlin that international differences in costs of endowments determine where comparative advantage would exist. A country specializes in the products whose production uses the abundant factor intensively. Khatibi (2008) attributes that it is relative factor scarcity that determine comparative advantage

METHODOLOGY
RESULTS AND DISCUSSION
CONCLUSIONS AND RECOMMENDATIONS
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