Comparison of revealed comparative advantage indexes with application to trade tendencies of cellulose production from planted forests in Brazil, Canada, China, Sweden, Finland and the United States

Abstract

The pulp industry is an important sector of the global economy and a positive contributor to the trade balance in pulp producing countries. The main objective of this study was to analyze the competitiveness in the production of wood pulp in the United States, Brazil, Canada, Sweden, Finland, and China. We employed two indexes – the revealed comparative advantage (RCA) index and the revealed symmetric comparative advantage (RSCA) index – to ascertain the underlying comparative advantages between countries. Further, we used the trade balance index (TBI) to assess wood pulp's impacts on trade balance. Results showed that under the RCA index, all countries but China have comparative advantages. The RSCA indicated that the highest comparative advantages belong to Finland, Canada, and Sweden. Trade balance, assessed via the TBI index, found positive trade balances for Brazil, Finland, Canada, Sweden, and the USA. China has the greatest comparative disadvantage. We concluded that the wood pulp industry has a strong positive influence on the export economies of Brazil, Finland, Canada and Sweden; and in the USA it has a moderate positive influence.