Assessment of Sri Lankan Cinnamon Export Competitiveness in the Global Market

Abstract

Cinnamon is the most valuable and important spice export crop in Sri Lanka which accounts over 85% of the world cinnamon exports. Competitiveness is one of the major challenges in cinnamon trade in an era of free trade. Intense competition faced by Sri Lanka with other countries results in adverse impacts on cinnamon trade thus decreasing its potential trading opportunities. This study aims to analyze the export competitiveness of Sri Lankan cinnamon in the world market. The study also considers the world’s top 10 cinnamon exporters. The contribution of this paper is that it measures the comparative advantage using a range of indexes namely the Balassa Revealed Comparative Advantage Index (BRCA), Additive Revealed Comparative Advantage Index (ARCA), Normalized Revealed Comparative Advantage Index (NRCA), Revealed Symmetric Comparative Advantage Index (RSCA) and Trade Balance Index (TBI) for the period from 2001 to 2020. Data are extracted from the International Trade Center (ITC) trade map (COMTRADE) database. BRCA (566.49), ARCA (0.01207), NRCA (7.28*10-6), and RSCA (0.996) result indicate that Sri Lanka has the highest comparative advantage in the global cinnamon export market. Madagascar (0.999) has the highest TBI value. The result of product mapping indicates that Sri Lanka, Madagascar, Vietnam, Indonesia and China have both comparative advantage and positive trade balances over other countries.