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A New Class of Revealed Comparative Advantage Indexes

Author

Listed:
  • Jenny P. Danna-Buitrago

    (Los Libertadores University Institute)

  • Rémi Stellian

    (Pontificia Universidad Javeriana)

Abstract

This paper draws upon a critical analysis of the three RCA indexes in Vollrath (1991) to propose a new class of RCA indexes. The baseline RCA index in this new class rests on the overall structure of trade, is symmetric, avoids size bias and is compatible with the Kunimoto-Vollrath principle. Possible modifications of the baseline RCA index are subsequently suggested to take into account GDP per capita data and to use adjusted trade data with the aim of better measuring comparative advantages. These modified versions together with the baseline RCA index give rise to a whole new class of RCA indexes. An application to the Euro area indicates that this new class is able to rank countries according to their respective levels of comparative advantages in a more consistent way than alternative RCA indexes. Furthermore, the new class of RCA indexes provides second-best solutions for time stationarity and the desirable distributional characteristics of an RCA index.

Suggested Citation

  • Jenny P. Danna-Buitrago & Rémi Stellian, 2022. "A New Class of Revealed Comparative Advantage Indexes," Open Economies Review, Springer, vol. 33(3), pages 477-503, July.
    • Handle: RePEc:kap:openec:v:33:y:2022:i:3:d:10.1007_s11079-021-09636-4
    DOI: 10.1007/s11079-021-09636-4
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    More about this item

    Keywords

    Comparative advantage; RCA index; Euro area;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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