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Comparative Advantage: Theory, Empirical Measures And Case Studies

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  • Tri WIDODO

    (Faculty of Economics and Business, Gadjah Mada University)

Abstract

This paper consists of three main parts i.e. theory, analytical tool and case studies of comparative advantage. Firstly, we review the theory and various empirical measures of comparative advantage. We would argue that for the catching-up economies, like ASEAN countries, the meaning of “leading exported products” could be examined from the two points of view i.e. international competitiveness and country’s trade balance. Secondly, we combine two indexes of comparative advantage, i.e. Revealed Symmetric Comparative Advantage (RSCA) index by Dalum et al. (1998) and Laursen (1998), and Trade Balance Index (TBI) by Lafay (1992), which represent well the two points of view, to propose an analytical tool, namely “products mapping”. Thirdly, this analytical tool is applied to analyze exported products (defined as 3-digit SITC Revision 2) of the ASEAN countries. This paper concludes that in the cases of ASEAN countries, the higher the comparative advantage for a specific product, the higher the possibility of the country as a net-exporter becomes. This finding strongly supports the theory of comparative advantage.

Suggested Citation

  • Tri WIDODO, 2009. "Comparative Advantage: Theory, Empirical Measures And Case Studies," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 57-82, November.
    • Handle: RePEc:aic:revebs:y:2009:i:4:widodot
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    2. Esquivias, M.A., 2017. "The Change of Comparative Advantage of Agricultural Activities in East Java Within the Context of Asean Economic Integration," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 9(1), March.
    3. Pawlak, Karolina, 2017. "Importance and Comparative Advantages of the EU and US Agri-food Sector in World Trade in 1995-2015," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 17(32, Part ), December.
    4. Smutka, L. & Pawlak, K. & Kotyza, K. & Svatoš, M., 2018. "Polish Sugar Industry Development," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(1).
    5. Girik Allo, Albertus & Sukartini, Ni Made & Widodo, Tri, 2017. "Dynamic Changes in Comparative Advantage of Indonesian Agricultural Products," MPRA Paper 80028, University Library of Munich, Germany.
    6. Natalia Ishchukova & Luboš Smutka, 2013. "Revealed comparative advantage of Russian agricultural exports," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(4), pages 941-952.
    7. Popa Angela Cristina, 2012. "ROMANIAâ€(tm)S SPECIALIZATION IN TRADE TOWARDS EU-27 - A REVEALED COMPARATIVE ADVANTAGE APPROACH," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 54-60, July.
    8. Lubos SMUTKA & Mansoor MAITAH & Miroslav SVATOS, 2018. "Changes in the Czech agrarian foreign trade competitiveness - different groups of partners' specifics," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(9), pages 399-411.
    9. Luboš Smutka & Mansoor Maitah & Miroslav Svatoš, 2019. "The Czech Agrarian Trade Comparative Advantages Distribution Based on Value and Volume Approach," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(6), pages 1613-1625.
    10. Karolina Pawlak & Joanna Lukasiewicz, 2022. "Does intra-industry specialisation enhance or limit comparative advantage? Evidence from the world citrus fruit trade," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(9), pages 338-347.
    11. Irena BENESOVA & Mansoor MAITAH & Lubos SMUTKA & Karel TOMSIK & Natalia ISHCHUKOVA, 2017. "Perspectives of the Russian agricultural exports in terms of comparative advantage," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(7), pages 318-330.
    12. Dominika Choros-Mrozowska, 2020. "Changes and Comparisons in Pattern of Polish Chinese Trade within the “16+1” Format," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 327-342.
    13. Luboš Smutka & Mansoor Maitah & Miroslav Svatoš, 2018. "Czech Agrarian Trade Comparative Advantages Distribution in Relation to Developed and Developing Countries," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 66(4), pages 1001-1015.
    14. Cimpoies, Liliana & Sarbu, Olga, 2020. "The competitiveness of Moldova’s agri-food trade with E.U. after DCFTA implementation," MPRA Paper 106297, University Library of Munich, Germany.
    15. Adam A. Ambroziak & Joanna Stefaniak, 2022. "The position of China in trade in services within the European Union," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 335-354, June.
    16. Naoki Sekiguchi, 2017. "Trade specialisation patterns in major steelmaking economies: the role of advanced economies and the implications for rapid growth in emerging market and developing economies in the global steel marke," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 30(3), pages 207-227, October.
    17. Eva Ervani & Tri Widodo & Muhammad Edhie Purnawan, 2019. "Comparative Advantage and Trade Specialization of East Asian Countries: Do East Asian Countries Specialize on Product Groups with High Comparative Advantage?," International Business Research, Canadian Center of Science and Education, vol. 12(2), pages 113-134, February.
    18. Laosutsan, Pheesphan & Shivakoti, Ganesh P. & Soni, Peeyush, 2016. "Comparative advantage and export potential of Thai vegetable products following the integration into the ASEAN Economic Community," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 20(4), December.
    19. Vlada Vitunskiene & Evaldas Serva, 2015. "Shifts In Lithuania’S Agri-Food Industry Export Competitiveness: A Comparative Analysis Versus High- And Medium-High Technology Manufacturing Industries," Oeconomia Copernicana, Institute of Economic Research, vol. 6(1), pages 7-31, March.
    20. Ishchukova, N. & Smutka, L., 2013. "Comparative Advantage: Products Mapping of the Russian Agricultural Exports," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(3), pages 1-12, September.
    21. Pawlak, Karolina & Poczta, Walenty, 2020. "Competitiveness of Polish Agriculture in The Context of Globalization and Economic Integration – Competitive Potential and Position," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 311270, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).

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    More about this item

    Keywords

    Revealed Comparative Advantage; Trade Balance; Products Mapping.;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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