RCA Index Research Articles

A Study of Diversification in Exports of China and India

The paper presents a detailed comparative study of the evolution in the direction and composition of exports of China and India between 1993 and 2010. The changes in the direction of exports is analyzed through country/commodity intersection by grouping countries together on the basis of income of which there are eight groups, and changes in the composition of exports is examined by employing the Revealed comparative advantage index and decomposing the growth in exports in terms of Intensive (existing products) and Extensive margins (new products) following the methodology of Amiti and Freund (2007). To analyze the country/commodity intersection and to compute the RCA index, the exports are classified into 5 main groups/categories: Product A group: Primary Products, Product B group: Natural Resource Intensive Products, Product C group: Unskilled Labour Intensive Products, Product D group: Technology Intensive Products, and Product E group: Human Capital Intensive Products and Sectors not classified according to factor intensity. The main findings of the study are: i) High income OECD plus non- OECD countries had dominant but declining shares in all the five product categories of exports of China and India, ii) China’s comparative advantage has shifted from Unskilled labour intensive group to Technology intensive group, but India continues to have comparative advantage in exporting Primary and Unskilled labour intensive products and, iii) the growth in exports of China and India was mainly accounted for by high growth of Intensive margins rather than in Extensive margins.

Brazil’s Agricultural Situation and Export Competitiveness of Soybean in the World and Korean Market

In Brazil, agricultural sector accounts for 15 percent of total employment and agricultural export takes 36 percent of the national merchandise exports. Particularly agricultural export has played an important role in Brazilian economic growth and stabilization. Brazil is a substantial agricultural exporter which obtains huge trade surplus in agricultural trade amounting USD 73,300 million. Major agricultural exports are grain and grain-processed products such as soybean, soybean cake, corn and soybean oil. Particularly soybean is the top exporting commodity in Brazil. Our Study overviews the situation of Brazilian agriculture and analyzes the export competitiveness of Brazilian soybean in the World and Korean markets. We employ several indexes such as price competitiveness, Market Share (MS), Revealed Comparative Advantage Index (RCA), and Comparative Advantage by countries (CAC) to analyze international competitiveness of Brazilian soybean. The main results of our study are as follows : First, U.S. Argentina, Paraguay and Canada are rivals with Brazil in the global soybean market. Second, Brazilian soybean has the 3rd highest price competitiveness following Paraguay and Argentina. Third, Brazilian soybean is second highest following Paraguay in a sense of export competitiveness through RCA and CAC index. Brazilian soybean has competitiveness in respect of comparative advantage not only in Korean market but also in global market. Especially CAC index of Brazilian soybean in the Korean market is higher than those of USA and China which have larger Korean market share than Brazil. However, the competition seems to be even more intensifying because Korea has already agreed on FTA with USA and China, and also Paraguay expands soybean export to Korea recently.

Badanie konkurencyjności polskiego eksportu z wykorzystaniem skorygowanego wskaźnika przewagi komparatywnej

The Balassa index (Revealed Comparative Advantage Index - RCA index) is used to estimate a country's export attractiveness and comparative advantage by industry sectors or commodity groups. Because it ranges from 0 to ∞, the measure has many drawbacks. Its empirical distribution is strongly asymmetric and is not stable in time. The Revealed Comparative Advantage Index distribution is strongly dependent on the number of reference countries, industries and commodity groups. As a result, some parameters of the RCA index distribution are not stable. These problematic properties render its outcomes incomparable across time and space. The paper proposes a transformation of the RCA index measure into a new index ranging from -1 to 1 by using a special class of rational functions. The new measure has a symmetric distribution with a stable mean and is independent of industry sectors and commodity groups. The adjusted Revealed Comparative Index was used to research export competitiveness in Poland as compared with Germany. The article compares the stability of the empirical distribution of the Adjusted Revealed Comparative Index and Balassa index across time and according to commodity groups. The data used come from Eurostat on Polish and German export and import commodities by Standard International Trade Classification (SITC) in 2005-2009.

Balance of Comparative Advantages in the Processed Food Sector of the Danube Countries

In this paper, we investigated the level of competitiveness of the processed food sector of the Danube region countries, in order to show the existence of comparative advantage and the correlation of exports. We used the Balassa (RCA–revealed comparative advantage) index and TPI (trade performance indexes). At first, using the Pearson and Spearman index, we examined the existence of correlations between the processed food sector of the Danube countries. Then, we applied the Least Significant Difference (LSD) test to further compare the value and answered the question: between which Danube countries are there significant differences? With the study, we found that the distribution of the RCA index in Bosnia and Herzegovina, Hungary, Moldova and Slovenia deviates from normality. We also found the existence of a strong correlation of the RCA index of the Czech Republic with Romania, Hungary with Moldova and Serbia, Moldova with Serbia and Bulgaria with Ukraine. Finally, we concluded that the development of trade in the countries of the Danube region requires the participation of all relevant interest groups and could play an important role in providing faster economic development, that is in achieving sustainable development of the countries, with the sustainable use of available resources.

Revealed comparative advantage and the alternatives as measures of international specialization

This paper provides an analysis of Balassa's 'revealed comparative advantage' (RCA). It shows that when using RCA, it should be adjusted such that it becomes symmetric around its neutral value. The proposed adjusted index is called 'revealed symmetric comparative advantage' (RSCA). The theoretical discussion focuses on the properties of RSCA and empirical evidence, based on the Jarque- Bera test for normality of the regression error terms, using both the RCA and RSCA indices. We compare RSCA to other measures of international trade specialization including the Michaely index, the Contribution to Trade Balance, Chi Square, and Bowen's Net Trade Index. The result of the analysis is that RSCA—on balance—is the best measure of comparative advantage.

USFDA Import Refusal and Export Competitiveness of Indonesian Crab in US Market

This paper attempts to analyze USFDA import refusal report and the export competitiveness of Indonesian crab in the US market. This research employed the RCA method to measure the comparative advantage. The results indicate that Indonesia has the highest total import refusal of crab during 2002 to 2013, with 381 refusal cases, dominantly caused by chloramphenicol (171 cases). The RCA Index calculation shows that unfrozen crab and prepared/preserved crab have the RCA index larger than one, showing their strong competitiveness in US market. In contrast, the RCA index for frozen crab is lower than one, showing its weak competitiveness.

Research on the Complementarity and Comparative Advantages of Agricultural Product Trade between China and CEE Countries<br/>—Taking Poland, Romania, Czech Republic, Lithuania and Bulgaria as Examples

There is huge potential in agricultural product trade between China and CEE countries. Taken Poland, Romania, Czech Republic, Lithuania and Bulgaria as examples, this paper uses RCA, TCI and GL indexes to analyze the complementarity and comparative advantages between China and others. Results show that agricultural product trade between China and CEE countries has the characteristics like highly complementarity, great potential for products having comparative advantages and obvious intra-industry trade tendency. China and CEE countries should further bring out their comparative advantages, and adjust product structure of exports, achieving mutual benefit and win-win result of bilateral trade.

Economic policy impact on competitiveness and efficiency of textile industry in central java

The purpose of this research was to determine the competitiveness and efficiency as well as assessing the impact of economic policies on the performance of the textile industry in Central Java. The competitiveness methods use a RCA, TSI, and IIT Indexes. The policy impacts use Policy Analysis Matrix and sensitivity analysis. The results show that the textile industry in Central Java had only a comparative advantage, but not competitive one. The lower protection level made the textile industry was vulnerable to both internal and external shocks. In general economic efficiency was still lower, so it had lower effect on the productivity and competitiveness level.

Açıklanmış Karşılaştırmalı Üstünlükler ve Rekabet: Türkiye Tarım Sektörü

The purpose of this study was to determine the competitiveness of the agricultural sector of Turkey in the international arena. For this analysis, food and agriculture trade data belong to Food and Agriculture Organization (FAO) in for the years 2000 to 2011 were used. The Revealed Comparative Advantage Index (RCA) was calculated for the 601 agricultural items for Turkey. If RCA greater 1, 1 th goods to the j th country shows that it has a comparative advantage. On the condition that only selected 78 agricultural items were founded over one value for RCA. According to these RCA index values, agricultural items were divided into two groups. Although the first group’s RCA values had range between 0 and smaller than 1, the second group’s RCA values had greater and equal to 1. It means that the higher RCA values correspond to the more stronger competitiveness. Namely, the strength of the second group’s competitiveness was better than the first group.

Competitiveness in International Trade in Knowledge-Intensive Services – The Case of Poland

The aim of this paper is to study Poland’s competitiveness in international trade in knowledge-intensive services (KIS). The author analyzes the trends in Polish KIS trade and tries to answer the question whether Poland is moving towards obtaining a comparative advantage in this field. The first part of the paper presents a definition and classification of KIS, indicators to measure competitiveness in international services trade, and a short review of the research in this field. The second part of the study is empirical. The author uses traditional indicators of international competitiveness such as: export performance, trade balance, and the RCA index. The analysis also touches upon the impact of Poland’s accession to the EU on its competitiveness in KIS trade. Finally, some possible determinants of Poland’s competitiveness in particular KIS sectors are indicated. The paper uses the Eurostat and WTO databases. The analyzed period for international transactions is usually 2000-2010, but for Poland the 1994-2010 period was used, i.e. since the European Agreement entered into force.

Rola zagranicznej wartości dodanej w tworzeniu przewagi komparatywnej Polski w światowym eksporcie towarowym

The paper deals with changing approach to measuring trade an competitiveness due to the widely spread process of international fragmentation of production process which makes it much more difficult to assess origin of products in international trade. Therefore a method was developed to use foreign and domestic value added in order to evaluate country's role in world trade as well as its comparative advantage. Authors apply this methodology to Polish trade in goods in 1995-2009 and reveal that for- eign components were an important part of its exports. Poland was highly dependent on foreign value added from European Union countries, especially Germany. Sectors with highest shares were: transport equipment, electrical and optical equipment, basic metals and fabricated metal products, chemicals and non-metallic mineral products. Foreign value added also affected Poland's comparative advantage - its impact on various industries was adverse. In some cases it improved RCA indexes while in others using domestic value added for the calculations resulted in a larger comparative advantage.

High-Tech Products Export Competitiveness, BRIC Countries in U.S Market: A Comparative Analysis

This paper compares the competitive advantages of high technology products export from BRIC countries to the United States using quantitative (ESI and RCA index) and qualitative analyzing of export value and distribution performance. We estimate a Varying Coefficient Model on panel data for BRIC countries from 2000 to 2010, using the Seemingly Unrelated Regression (SUR) estimator to correct cross-sectional heteroscedasticity and serial autocorrelation. We found that BRIC countries high tech products have comparative advantages. Research and Development investment and patents are significantly positively related to the high tech export of the United State market while FDI still does not directly promote the competitiveness. The BRIC countries should learn from each other’s successful ways concerning FDI management, patent application and research regulation to achieve better and more comprehensive improvement of high tech export competitiveness.

Measurement of comparative advantages of processed food sector of Serbia in the increasing the export

Summary The subject of this research is to analyse the comparative advantages of export of processed food sector, in order to define the position of the processed food sector in Serbia in compare to the Danube region and highlight the products that were and will be the main exporting agricultural product of Serbia. In this research, we have applied the following indexes: RXA, RTA, ln RXA, RC, RCA, LFI, GL, Sm. We have examined the movement of the index for the period 2005 - 2011th year. We have investigated the existence of correlations RCA index of processed food sectors with the application of the Pearson and Spearman index determined as RCA variable mutual co-variant. We found that following products showed an increase of comparative advantage in export as measured by the Balassa index: milk products, cheese and curd, groats and meal of other cereals, preparations of cereals, flour, starch, vegetables, roots and tubers, processed, prepared and Fruit products, sugar, molasses and honey, chocolate and other food preparations with cocoa, animal food (including un milled cereals), edible products and preparations, alcoholic beverages, non-alcoholic beverages, solid vegetable fats, oils, ‘ soft ‘ and animal and vegetable fats.

Lithuania’s Export Specialization According to Technological Classification

In the period of the last decade, Lithuanian economy has undergone numerous structural changes concerning manufacturing and exports. This research study introduces the pattern of Lithuania’s export specialization according to technological classification and analyses the changes of trade-based indices over the period of 2006 – 2011. The evaluation of export specialization lays the foundations to the analysis of actual performance of the manufacturing industry, the current exports structure and forecast the trends of transformation into relatively technological intensive and high-skill labour intensive areas. The core aim of the research paper is to reveal the peculiarities of export specialization according to technological classification of commodities of Lithuanian manufacturing industry. It is significant to reveal the importance not only of the high-tech, but also of the low-tech manufacturing industries for the country’s economy, whereas these industries prevail in the Lithuanian economic structure. This study employs the revealed comparative advantage approach to examine export specialization pattern and trends in the Lithuanian manufacturing industry according to technological classification at product category level. The study presents calculations of the Balassa, RCA and XCI indices to illustrate the solutions of the raised scientific problem. DOI: 10.5901/mjss.2013.v4n11p346

Comparative Advantage In The Southern Africa Customs Union (Sacu)

The authors sought to find out whether the Southern African Customs Union (SACU) possesses comparative advantage. They found that South Africa has comparative advantage in the production of 727 product lines, Botswana in 268 product lines, Swaziland 243 product lines, Namibia 213 product lines and Lesotho 85 product lines. They also found that the highest degree of specialization in a particular product was observed in Lesotho in the production of cartridges for rivet with an average RCA index of 19215. The authors concluded that SACU has comparative advantage although such comparative advantage has a narrow base for a customs union (CU). Further it was concluded that due to imposition of the common external tariff (CET) in SACU and a narrow base of the products in which it has comparative advantage, it may be experiencing trade diversion rather than trade creation by replacing low cost producers outside SACU in favour of intra-SACU high cost producers. That South Africa, although not the least producer, is unfairly benefiting due to the imposition of CET which prevents other countries from exporting their products to Botswana, Swaziland, Namibia and Lesotho under the same conditions. These countries are, therefore, disadvantaged. For this reason, the authors advocate communication at policy level, to facilitate expansion of SACU as means of narrowing trade diversion.

The Revealed Comparative Advantage of Swaziland

The authors investigate the revealed comparative advantage of Swaziland. They investigate whether or not Swaziland has comparative advantage in the products it exports to the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC), Southern Africa Customs Union (SACU) and the rest of the world. The results show that Swaziland has RCA ≥1 in 449 product lines hence has comparative advantage in such product lines. Chem wood pulp, sulphite , coniferous unbleached has the highest RCA index of 3106. The products in which Swaziland has comparative advantage includes manufactured and agricultural products. Swaziland could improve the range of the products in which it has comparative advantage through attracting foreign direct investment via trasnational corporations and exploration of new resources.

Gli scambi commerciali agroalimentari euromediterranei. Contributo allo sviluppo del "Processo di Barcellona: Unione per il Mediterraneo"

In this study we analyzed trade in agri-food products in Mediterranean countries, included in the Union for the Mediterranean, to identify specialization patterns in the agri-food sector within the Mediterranean basin. Through the rca index (Balassa) it has been possible to assess the growing importance that non European-Union countries are gradually gaining in traditional agri-food sectors, such as fruit and vegetables, and in other agri-food sectors with higher added value, such as processed products, which only a decade earlier, were less competitive. In contrast, the main eu Mediterranean countries show stability in their agri-food specialization model, with a few exceptions mainly concerning products requiring a high degree of manipulation.

Propozycja modyfikacji wskaźnika ujawnionej przewagi komparatywnej z wykorzystaniem funkcji wymiernych

The Revealed Comparative Advantage Index (RCA) is used to estimate the export attractiveness and comparative advantage in the country by industry sectors or commodity groups. This measure has many disadvantages because it ranges from 0 to ∞. Its empirical distribution is strongly asymmetric and is not stable in time. The Revealed Comparative Advantage Index distribution is strongly dependent on the number of reference countries, industries and commodity groups taken under consideration. In consequence, some RCA distribution parameters are not stable. These problematic properties make its outcomes impossible to compare across time and space. The paper proposes transforming the RCA measure into a new index, ranging from -1 to 1, by using a special class of rational unctions. The new measure has a symmetric distribution with a stable mean and is independent of the industry sectors or commodity groups. Empirical distributions of the adjusted RCA index are built on the basis of data on Polish export and import commodities by Standard International Trade Classification (SITC).

China's Economic Development and Sino-Japanese Economic Relationships: Beyond the Flying Geese Pattern Theory

This article is aimed at exploring China's development process and Sino-Japanese economic relations in terms of the Akamatsu flying geese pattern (FGP) theory. On the basis of dynamic comparative advantage, the theory predicts that China's trade advantage lies primarily in labor-intensive products and industries. However, the trade pattern has shifted relatively from such products to more capital-/technology-intensive ones. The article tests the changes in China's comparative advantage utilizing the RCA index, International Competitiveness coefficient and trade similarity index. It concludes that China's development path and Sino- Japanese economic relationships cannot be explained by the FGP theory alone, though the theory is still basically adaptable to the Chinese scene; deviations from that theory could be derived from various functions of FDIs, particularly importation of new technologies, that China has extensively enjoyed.

The comparative advantage of Chinese manufactured exports

PurposeConsiderable research has been conducted on the comparative advantage of Chinese manufactured exports before 2000, but too little attention has been focused on the twenty‐first century. With this rapid growth of China's export volume since 2001, what is the change in comparative advantage? Have qualitative changes taken place? The purpose of this paper is to conduct a thorough analysis of the comparative advantage of Chinese manufactures from 2002 to 2009, not only within the world market but also in the US market.Design/methodology/approachThe research is based on 144 manufactures' comparative advantage in the US and world market, displaying the distribution and variation range for the comparative advantage of Chinese manufactures at different technological levels in the 2002‐2009 period with the RCA Index. This paper classifies 144 kinds of manufactures (on Standard International Trade Classification, Rev. 3 data) by technology level into five general groups and nine small groups, which cover the majority of Chinese manufactured exports.FindingsFirst, the authors found that types of Chinese manufactured products with comparative advantage in both world and US markets are increasing. Most of the products with comparative advantage are low technology (LT) products. Second, in the world market, the comparative advantage of Chinese medium technology (MT) products has largely improved, but their RCA indexes are low and their kinds of products with very high comparative advantage are small. Third, as a whole, Chinese manufactured exports are of greater comparative advantage in the world market than in the US market. Specifically, LT products have the same position in world and US markets, while MT products and high technology (HT) products obviously have a greater comparative advantage in the world market.Originality/valueFirst, little research has been conducted on the comparative advantage of Chinese manufactured exports since 2001. This paper undertakes a thorough analysis of the comparative advantage of Chinese manufactures from 2002 to 2009, not only within the world market but also in the US market. Second, it is very important for China to stabilize the overseas market demand and secure exports, this paper shows how China could cope with a crisis.