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ROMANIAâ€(tm)S SPECIALIZATION IN TRADE TOWARDS EU-27 - A REVEALED COMPARATIVE ADVANTAGE APPROACH

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  • Popa Angela Cristina

    ()
    (Academia de Studii Economice Bucuresti, REI)

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    Abstract

    "International competitiveness" is a complex topic which raised over time many questions and theories on key factors that underpin it and is still subject to wide debate. Such analysis proves to be necessary under the new requirements raised by the participation of Romanian organizations in the European and global competitive environment in which competiting for new markets can be a platform of economic recovery. As companies compete for markets and resources, national economies compete with each other to achieve performance in a specific activity: for example, we can say that Romania has become less competitive in clothing production, and competitive in cars production. But it makes sense to say that "Romania has become more or less competitive as the economy?". The answer is no."Competitiveness" is a meaningless word when referring to national economies. Deniying Romanian competitiveness in a particular industry does not mean that Romania's economy is less competitive. The decline in these industries may be a manifestation of their change in production factors endowment or necessary reallocation these factors from old activities with comparative advantage to new ones. This paper aims to examine the structural competitiveness of Romania vis-a-vis EU-27. Empirical analysis is based on Revealed Comparative Advantage (RCA), an indicator often used in international trade analysis. Section II reviews the empirical literature on the comparative advantage and the competitiveness of Romania, highlighting various theories and approaches, alternative measures of RCA indices are presented in the section III, section IV reports empirical results and the final section draws some conclusions based on the findings. In 2009, in terms of orientation of the foreign investors towards the economic sectors, according to NACE Rev. 2 Classification, the direct foreign investments were directed mainly to Manufactured goods (31,1% of total), within its best represented branches: oil, chemicals, rubber and plastic processing (6,3% of total), metallurgy (5,2%), transport industry (4,7%), food, beverage and tobacco industry (4,1%) and cement, glass, ceramic (3,3%), some of the sections having low weight to the potential, such as textiles, clothing and leather (1.4%), decreasing their attractiveness due to the convergence of non-tradable goods prices towards Eurozone prices, according to the Balassa-Samuelosn effect. Development of sections refering to intensive technology products should be a priority in the economic transformation of the countries converging to Euro Zone, especially Romania. These sections are: XVI: „Machinery and mechanical appliances; electrical equipment; sound and image recorders and reproducers†and XVIII „Optical, photographic, cinematographic, medical or surgical instruments and apparatus and similar; clocks and watches; musical instruments; parts and accessories thereofâ€. An increase in exports of these products may have beneficial effects on trade balance, balancing it by reducing the imports of these goods.

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    Bibliographic Info

    Article provided by University of Oradea, Faculty of Economics in its journal The Journal of the Faculty of Economics - Economic.

    Volume (Year): 1 (2012)
    Issue (Month): 1 (July)
    Pages: 54-60

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    Handle: RePEc:ora:journl:v:1:y:2012:i:1:p:54-60

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    Keywords: Revealed Comparative Advantage; structural competitiveness; specialization; European Union;

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    1. 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, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 57-82, November.
    2. Thomas Vollrath, 1991. "A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 127(2), pages 265-280, June.
    3. Andrea Zaghini, 2005. "Evolution of trade patterns in the new EU member states," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 568, Bank of Italy, Economic Research and International Relations Area.
    4. Janno Reiljan & Maria Hinrikus & Anneli Ivanov, 2000. "Key Issues In Defining And Analysing The Competitiveness Of A Country," University of Tartu - Faculty of Economics and Business Administration Working Paper Series, Faculty of Economics and Business Administration, University of Tartu (Estonia) 1, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    5. Balassa, Bela, 1977. "'Revealed' Comparative Advantage Revisited: An Analysis of Relative Export Shares of the Industrial Countries, 1953-1971," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 45(4), pages 327-44, December.
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