Comparative Advantage Of The RCA Index

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The RCA index was used by many researchers around the world like Leu in 1998 presented that comparative advantage had shifted from Japan to East Asian Economies using RCA index. His analysis focused mainly on exports of these countries to US market from 1980 to 1994 and the results support his belief that comparative advantage had shifted from Japan to Taiwan, Korea and Singapore.
Balassa (1977) had undertaken an analysis of the pattern of comparative advantage of industrial countries for the period 1953 to 1971. Balassa’s results showed that while the extent of export diversification tends to increase with the degree of technological development a reversal takes place at higher levels.
Lim (1997), attempted to illuminate the characteristics of North Korean economy by examining her foreign trade. He categorizes goods into three types based on Ricardo, Hecksher-Ohlin and product cycle theories as which theory supports the production and trade of that particular good in the world market. Based on RCA analysis, he elucidates the level of development achieved by North Korea from Ricardo to HO to Product cycle goods.
Akhter et al., (2008) have analyzed the performance of footwear industry of Pakistan and made its comparison with China and India. The revealed comparative advantage index had been employed to analyze exports of footwear industry classification. Their estimated results highlight the pattern of comparative advantage in the footwear sector for the time period 1996

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