Agriculture Reference
In-Depth Information
X
−
M
RCA
=
ic
ic
ic
(1)
X
+
M
ic
ic
where
RCA
ic
= revealed comparative advantage index of commodity
C
for
country
i
;
X
ic
= export value of commodity
C
by country
i
;
M
ic
= import
value of commodity
C
by country
i
.
The ratonale behnd the ndex s that country
i
has RCA n good
C
f t
exports more of t than t mports. Country
i
has a comparatve advantage
n exportng commodty
C
when
RCA
ic
s postve. If
RCA
ic
is negative,
country
i
has a comparatve dsadvantage n producng the commodty.
The larger
RCA
ic
is, the stronger is the comparative advantage. The index
ranges between -1 and +1.
A comparson of RCA n Chna and ASEAN n 2005
In 2005 China had strong RCA in vegetables and fruits, fish, animal products,
and processed products, relatively weak RCA in sugar and cereals, and clear
revealed comparative disadvantage in raw materials, oil seeds, vegetable
oils and rubber (Figure 12.6).
ASEAN has RCA in vegetables and fruits, fish, vegetable oils and rubber,
lower RCA in processed products and sugar, and revealed comparative
disadvantage in raw materials, oil seeds and cereals.
There are some overlaps between the two economes. Chna and ASEAN
show significant comparative advantage in vegetables and fruits, and fish.
Usually, we think that there will be competition if both economies have
comparative advantage in the same commodity. Therefore, as these two
economies become more integrated, some adjustments are inevitable.
With further decomposition of the vegetables and fruits group, we find
that competton s not as lkely as the aggregate RCA would suggest. Takng
the fresh and dry fruits category (SITC057) as an example,
3
Chna has RCA
in temperate fruits (for example, apples, citrus and pears) and revealed
comparative disadvantage in tropical fruits (for example, bananas and
mangoes). The combined share of apples, citrus and pears accounted for
90.5 per cent of China's total exports of fruits to ASEAN in 2005. In contrast,
ASEAN has RCA n tropcal fruts and revealed comparatve dsadvantage
