Revealed Comparative Advantage of Ethiopian Leather Industry with Selected African Economies

Abstract

The aim of this paper is to analyze the growth pattern of trade flow and trade comparative advantages of the leather industry products between some selected African economies-Kenya, Egypt, Tunisia and with particular focus on Ethiopia between 2004 to 2013. In doing so, it has been calculated the Balassa index of revealed comparative advantage using industry data at the HS 2-digit level. The studies mainly focus on the two articles of Ethiopian leather export namely, Product: 41 raw hides and skins (other than furskins) and leather, and Product: 42 Articles of leather, animal gut, harness, travel goods. An in-depth revealed comparative advantage (RCA) has been conducted for these two categories separately and the analysis shows that Ethiopia has a comparatively high RCA in raw hide and skin exports over the selected economies during the period of study. Even if RCA index for leather and leather products is less than one, a very promising trend has been observed, as index has been increased about 3,395% in the studied time. This indicates that Ethiopia has significant potentiality for specialization in leather export both in raw hides and skins and leather product. The paper also highlights that all stakeholder in the country has to work very closely to boost the performance of the leather industry export in the light of evidence. Therefore, investors, entrepreneurs and policy makers should specialize in both raw hides and skins and leather and leather productions and exports to generate more export revenues for the country.