International Comparative Advantage Research Articles

The Influence of GVC Participation and Division of Labor Status on the Comparative Advantage of China’s Wood-Based Panel Industry

This article innovatively proposes a new display comparative advantage index (NB*). Based on the characteristics of existing comparative advantage indices and practical research needs, the NB* index can more accurately measure whether a country’s products have comparative advantages among other countries within the selected region, which to some extent expands the research boundary of industrial international competitiveness evaluation indicators. Meanwhile, this article takes China’s wood-based panel industry as an example to calculate the comparative advantage level of China’s wood-based panel industry among Regional Comprehensive Economic Partnership (RCEP) member countries and further explores the impact of global value chain participation and division of labor status on the international competitiveness of the industry. Research has found that, firstly, although China’s wood-based panel industry has a relatively lower level of comparative advantage among RCEP member countries, it still has a certain level of competitiveness in some developed and developing countries’ markets; Secondly, in terms of the wood-based panel industry, a higher level of global value chain participation can effectively improve the international comparative advantage level of the domestic wood-based panel industry. Thirdly, the level of division of labor in the industrial chain has a significant positive impact on the comparative advantage level of China’s wood-based panel industry in RCEP member countries. Therefore, in order to enhance the international competitiveness of the domestic wood-based panel industry, it is necessary to actively participate in the global value chain and continuously move towards a higher level of division of labor in the industry chain.

Analysis on technical structure and competitiveness of ICT manufacturing industries

In order to analyze the technical structure and international comparative advantage of the information and communication technology (ICT) manufacturing industry, a complete set of ICT manufacturing product categories has been constructed by matching National Economical Industry Classification (GB/T4754-2017) with Harmonized System (HS) Codes, based on the relevant definitions in International Standard Industrial Classification (ISIC). The proposed definition overcomes inherent defects such as inaccurate scopes, lagging data and rough categories, which are characterized by commonly utilized product-level based classification approaches. Within the given framework, this paper has designed the technology content related indicators from the perspective of production distribution, and divided ICT product categories into high-end, medium-end and low-end manufacturing classifications according to respective global shares. Then, we have calculated international market shares (IMS), revealed comparative advantages (RCA), and market penetration rates (MPR) of ICT manufacturing exports for major economies from 2010 to 2021. Finally, development characterizations of ICT manufacturing industries for China's Mainland are analyzed, and several practical suggestions are provided.

International Comparative and Competitive Advantage of Post-Soviet Countries in Tourism

In this study, the comparative and competitive advantage of Post-Soviet countries in the tourism sector is examined. Firstly, whether the tourism sector of the countries included in the sample developed between 1995 and 2018 was examined. Revealed Comparative Advantages Index which is developed by Balassa and Expanded Balassa Index were used to analyze the comparative and competitive advantage of countries, respectively, which are the main purpose of the study. The results of the study, which are calculated based on the data obtained from the database of the World Bank, provide information especially regarding the advantageous position of Georgia regarding Balassa Index. In addition to Georgia, Armenia, Kyrgyz Republic, Moldova, Tajikistan, Azerbaijan, Estonia and Uzbekistan have international comparative advantage and when the situation of the countries is evaluated over the EB index it is concluded to, Tajikistan and Georgia have strong, Kyrgyz Republic and Moldova have medium, Latvia, Estonia, Armenia, Lithuania and Belarus have weak competitive advantage. The research is important in terms of the policies that Post Soviet countries will form within the scope of tourism sectors.

Competitiveness Indonesia tea in international market

The condition of the international market which has become a free market raises various challenges in increasing the value of exports for tea producers, especially Indonesian tea producers. In the international market competition, Indonesian tea producers not only face an increasing number of production and export volumes in the international market, but also must be able to consider aspects of consumer orientation. Thus, this will increase the superiority of Indonesian tea in the international market, both competitive advantage and comparative advantage. By using data on the export value of tea commodities 2001-2017 from 6 major tea exporting countries, this paper aims to identify the comparative and competitive advantages of Indonesian tea in the international market. It was analysed by using RCA and ECI. The Indonesian tea trade still has a chance to be increased because of the competitiveness of Indonesian tea especially green tea with the code HS 090210 and HS 090220 has a comparative and competitive advantage.

China India Merchandise Trade: Opportunities and Challenges

Using the export data at HS 2-digit level, the paper shows that China has maintained a stable export basket over time. By comparison India has intensified exports of competitive products indicating greater penetration into the world markets. The export structures of China and India demonstrate a large number of opportunities indicating greater possibilities of augmenting the trade structures. For both economies, the number of bilaterally competitive products is less than the number of internationally competitive exports. The competing interests that constitute the challenges, between China and India, in products with high intensity of low priced unskilled labour weigh down the bilateral competitiveness despite presence of international comparative advantage. The behaviour of China’s bilateral competitiveness vis-a-vis India has become more consistent with products demonstrating competitiveness both at the bilateral and international levels. The pattern of India’s bilateral competitiveness vis-a-vis China continues to be in tandem with India’s international competitiveness, albeit to a lesser extent than before. The performance of India’s bilateral exports seems to have been restricted due to procedural delays. By comparison, China’s exports to India exhibit relative departure from international competitiveness demonstrating its ability to penetrate the Indian markets.

What the OECD-WTO TiVA Data Tell Us about Comparative Advantage and International Trade in General

In this article, the recently published OECD-WTO TiVA data are used to re-examine the question of comparative advantage. Using the framework developed in Beaudreau (2011), it delves into the structural determinants of vertical, as opposed to horizontal, comparative advantage (VCA). In particular, it is shown that resource-based VCAs are fewer in number but greater in magnitude than knowledge-based ones, and that VCAs in R&D-intensive sectors are greater in number but smaller in magnitude. Furthermore, it is shown that countries specialize, having a limited number of VCAs. International specialization and comparative advantage are shown to be based in large measure on resources and knowledge.

International Marketing and Comparative Advantage: An Assessment of Angola’s Export Portfolio

The authors have highlighted the role of the export market in Angola and investigated the country’s comparative advantage in products other than Oil and Diamonds, which are currently reported to account for over 80% of the nation’s GDP. The information provided is aimed at the facilitation of product diversification in Angola’s export portfolio which is currently thin. The authors found that Angola has comparative advantage in 351 product lines. The highest comparative advantage (178.8) is for powders/flakes of aluminum of lamellar structure. Diamonds and oil were not among the top 50 products on the basis of revealed comparative advantage. The authors concluded that because Angola has comparative advantage in a wide range of product lines other than oil and diamonds, the country should improve its business operating environment and embark on strategic international marketing to increase earnings from its endowment. They recommended that Angola’s export development programme should contribute to equal distribution of wealth and that the government should enact laws and commit itself to stamping out corruption.

Economic literacy: basic economics with an attitude

Part I Microeconomics and the theory of markets: introduction - the organization of the book demand and supply the theory of the firm, market structures, factor markets and the distribution of income. Part II Macroeconomics: the economy as a whole - definitions and analyses fiscal policy, monetary policy, recession and inflation. Part III International economics and national economies: international economics and comparative advantage the international economy - the rise and fall of Bretton Woods.

International Specialization and Labor Unions: Evidence from OECD Countries

The aim of this paper is to explore the role of the institutional determinants of international comparative advantage. Starting from a theoretically well-founded general-equilibrium framework, where specialization depends on relative factor endowments and technological differences, we study the possible additional effect of labor unions. Using country–year panel data, we obtain that they are an important determinant of relative economic performance for a sample of manufacturing sectors. In particular low wages–labor-intensive industries turn out to be relatively disadvantaged, while high wages–capital-intensive sectors are relatively advantaged by stronger labor unions. We also allow for different institutional scenarios, letting unionization patterns interact with different regimes of bargaining coordination and social security systems. Our main conclusions are not substantially altered.

International Specialization and Labor Unions: Evidence from Oecd Countries

The aim of this paper is to explore the role of institutional determinants of international comparative advantage. Starting from a theoretically well founded general equilibrium framework, where specialization depends on relative factor endowments and technological differences, we study the possible additional effect of labor unions. Using country-year panel data, we obtain that they are an important determinant of relative economic performance for a sample of manufacturing sectors. In particular low wages-labor intensive industries turn out to be relatively disadvantaged, while high wages-capital intensive sectors are relatively advantaged by stronger labor unions. We also allow for different institutional scenarios, letting unionization patterns interact with different regimes of bargaining coordination and social security systems. Our main conclusions are not substantially altered.

Friction Induced Trade

This paper develops a simple model of friction induced international trade. Frictions restrict the substitutability of goods and consequently similar sellers choose to offer quality differentiated products in equilibrium. International comparative advantage then leads countries to trade even though there might be a strong bias for domestically produced goods. If trade is induced by frictions, the development of information technology leads to less international trade and higher wages. Friction induced trade is also associated with price dispersion, which falls as frictions are reduced.

International Productivity Differences, Infrastructure, and Comparative Advantage*

AbstractThis paper provides an empirical analysis of the effect of infrastructure provision on industry‐level productivity and international specialization, as suggested by Clarida and Findlay’s (1992) model. We calculate total factor productivity (TFP) for 18 developed and developing countries and 10 manufacturing industries, and study the effects of supplies of roads, telecommunications and electric power on international variations in sectoral TFP, i.e. comparative advantage. We also examine the effects of infrastructure on the sectoral composition of output across countries. Using a three‐stage least‐squares estimation strategy to control for endogeneity of infrastructure provision, we find that infrastructure, especially roads, helps to explain patterns of comparative advantage and international specialization.

International Competitiveness and Comparative Advantage: A Survey and a Proposal for Measurement

The concept of competitiveness, or competitive advantage, has been given numerous interpretations and tends to be ambiguous. Comparative advantage, although rigorously defined in the Ricardian trade model, is also subject to different interpretations when extended beyond the classical trade theory and, particularly, with respect to its measurement. The present paper first reviews the literature that deals with definitions and measurements of these concepts, distinguishing their main characteristics, such as macro vs. micro, static vs. dynamic, positive vs. normative, ex ante vs. ex post, as well as the different uses made of the proposed measures. Second, the paper proposes an integrated approach, in which it is demonstrated how competitiveness and comparative advantage are best related to each other and how they differ. The proposed measurement serves the purpose of quantifying the different sources of competitiveness. It is shown how it can be applied to guide policy makers in their evaluation of trade and industrial policies. The latter aspect is illustrated by reference to several applied studies using the method of analysis in the context of policy reforms in India, Mali, Kenya and Uganda.

Key Economic and Social Challenges for Latin America: Perspectives from Recent Studies

The paper draws on recent studies at the W odd Bank and elsewhere to highlight four aspects of Latin America's current challenges. First, high inequality, partly related to historical relations between Europeans, indigenous and Afro-descendants, but reinforced by continuing dualism between the formal and informal sectors. Second, education, where the region suffers from a serious "secondary deficit" and weak educational quality. Third, the business climate, which exhibits continuing problems with inappropriate regulation while infrastructure provision has suffered from cutbacks to public provision, only partly compensated for by increased private investment. Finally, Latin America's future sources of international comparative advantage: whether in natural resource-based exports or in manufacturing, the region needs to improve performance in mobilizing knowledge and technology.

The great realignment: How factor-biased innovation reshaped comparative advantage in the U.S. and Japan, 1970–1992

Recent changes in comparative advantage in the largest OECD economies contradict static Heckscher–Ohlin–Vanek theory. Japan's rising share of machinery exports and the improved comparative advantage of the USA in heavy industry were accompanied by growing scarcities of factors used intensively in these sectors. We show that under factor-price equalization, directed technical change leads to increasing specialization in goods intensive in each country's abundant factor. Testing this hypothesis with 1970–1992 export data from 14 OECD countries, we find that international comparative advantage was reshaped by biased innovation in the largest economies that increased the effective stocks of their abundant factors.

New Economy - an analysis of the competitiveness related to education of students and managers

New Economy deals with competitiveness analysed by international comparative advantage of commodity and regional trade. According to New Economy we are forced to quantify the contribution of tradable goods and services into international competitiveness. New Economy shifts the current national competitiveness into a higher comparative advantage of comparable commodities of the world competitiveness. The methodology of calculation of domestic inputs and outputs is expanded by inputs and outputs of the comparable countries, integrated territories or also international agro-commodity trade.

The Social Constructions of Money

As Buchan (1998) so aptly puts it, money is incarnate desire; it is many things to many people. It has served to shape society through the advent of trade in ancient civilizations, or as the catalyst for military campaigns. The purpose of this paper is to examine the physical mechanisms that perpetuate society's reliance on money, and to uncover the social constructions that allow society to value money despite its various forms.There is no all encompassing rule or set of standards governing the physical form of money. Certainly there are more established and accepted forms of money or currency that have been adopted by various nations, providing symbols of national identity. The most notable the US dollar, the most widely accepted and common benchmark for international currencies. Contrasted with the Indonesian rupiah, which holds little value in the international market, a value reflected in the country's relatively low international standing. Such differences are the result of a bigger system based on international trade and comparative advantage whose boundaries lie beyond the definition of this discussion.

State Developmentalism Without a Developmental State: The Public Foundations of the “Free Market Miracle” in Chile

AbstractIf export orientation is a goal in a sustainable development strategy, this study argues that public interventions at the sectoral level in a variety of markets can produce economic reorientation that pursues international comparative advantage faster and at lower cost than free market forces can. Pervasive failures in information, credit, input, distribution, and insurance markets can render strictly market-based adjustment both slow and costly. Although Chile's export boom and high growth rates have been associated with its free market economic policies, this article, based on a comparison of the fruit, fish, and forestry sectors, contends that new forms of public intervention were crucial catalysts in shaping a sustained export response.

Cones of diversification in a model of international comparative advantage

The hypothesis that all countries belong to a single cone of diversification is often used in studies of international trade. However, contrary to this hypothesis, the range of capital–labour input ratios in US industries does not encompass the range of capital– labour endowment ratios in the world’s economies. Furthermore, among countries with capital–labour endowment ratios below the range of US capital–labour input ratios, wage rates are much lower than in the US. In this paper, the one-cone hypothesis is assessed relative to a two-cone alternative by clustering countries with similar factor proportions, estimating regressions for gross national product and net exports, testing for equality of coefficients, and approximating the posterior odds on one- and two-cone models. Rejecting the one-cone hypothesis, the paper presents estimates of a two-cone model and considers their implications for factor flows and the prospects of emerging market economies.

Agglomeration and the location of innovative activity

A paradox has been the emergence of the importance of local proximity and geographic clusters precisely at a time when globalization seems to dominate economic activity. The purpose of this paper is to resolve this paradox by explaining why and how geography matters for innovative activity and ultimately for the international comparative advantage. Globalization and the telecommunications revolution have triggered a shift in the comparative advantage of the leading developed countries towards an increased importance of innovative activity. This shift in comparative advantage has increased the value of knowledge-based economic activity. Since knowledge is generated and transmitted more efficiently via local proximity, economic activity based on new knowledge has a high propensity to cluster within a geographic region. This has triggered a fundamental shift in public policy towards business, away from policies constraining the freedom of firms to contract and towards a new set of enabling policies, implemented at the regional and local levels.