COMPARATIVE ADVANTAGES IN AGRO-FOOD TRADE OF HUNGARY, CROATIA AND SLOVENIA WITH THE EUROPEAN UNION

Abstract

This paper investigates comparative trade advantages in agro-food trade. We analyze comparative advantages of Hungarian, Croatian and Slovenian agro-food trade in the European Union (EU). The empirical research seeks to explain how revealed comparative advantages have developed across countries, main product groups and over time and what are likely their implications for multifunctional rural development in the enlarged EU. We employ a disaggregated trade dataset to identify the revealed comparative advantages to provide broader policy implications. The empirical results confirmed bulk of agro-food and forestry products with revealed comparative advantages in the EU markets for Hungary and to a lesser extent for Croatia, but have not identified any such aggregated agro-food product group for Slovenia. Yet, also Hungary and Croatia have faced difficulties in comparative trade advantages in consumer-ready foods and processed intermediaries. Agro-food sectors in Hungary are likely to continue to have a significant role in the Hungarian and to a lesser extent in Croatian rural areas, but employment and income activities are more likely to be combined with other more rapidly growing service activities. In Slovenia, traditional agro-food activities under increasing competitive pressures are more likely to shrink.