Agriculture Reference
In-Depth Information
the underlyng pattern of comparatve advantage. Ths dea has gven rse
to varous RCA ndcators. One of these ndcators s the net export rato
(NER
j
), which is defined as
RCA (NER
ij
) = (X
ij
- M
ij
) / (X
ij
+ M
ij
)
where X
j
are the exports of good i by country j and M
j
are the mports of
good nto country j.
The ratonale behnd the ndex s that countres are revealed as havng
a comparatve advantage n a partcular good f they export more of t than
they import. However, to simply consider net exports might be misleading
where, for example, we compare a large and a small country. For this
reason net exports are dvded by total trade (exports plus mports). Net
export ratios have a minimum value of -1 (the country only imports the
good concerned) and a maximum value of +1 (the country only exports the
good). Postve values are taken to reveal a comparatve advantage and
negatve values are taken to reveal a comparatve dsadvantage.
However, RCA indices have one major flaw. The principle of revealed
comparative advantage presumes that observed trade flows are generated
by underlying comparative advantages and disadvantages. However,
observed trade flows are not just created by underlying economic forces
but are often significantly affected by government policies. Because of
the higher levels of government intervention in agriculture, this problem
has been potentally more serous for trade n agrcultural products than
in manufactured goods. As far as China is concerned, the WTO accession
commtments have led to trade beng less affected by government
intervention. Therefore, RCAs for the period since 2001 are more likely to
show true comparatve advantage than prevously.
Revealed comparatve advantage n Chna's agrculture
Table A11.3 presents China's RCA indices calculated by using the measure of
net export rato for agrcultural products for the perod of 1992 to 2005.
Wth respect to ndvdual commodtes
,
in the group of cereals, vegetable
oilseeds and vegetable oils, with the exception of some years China has
