Robustness of the Proposed Measures of Revealed Comparative Advantage
AbstractThe concept of revealed comparative advantage (RCA) stands as a major pillar in empirical trade literature. Yet there is no absolute preference among the suggested RCA measures. Given that these are volume-based indices, results of any relevant empirical analysis would be heavily influenced by the choice of the RCA measure. Considering such an ambiguity, this paper critically evaluates the proposed measures of RCA to identify the ideal measure based on theoretical, statistical and empirical precedence. Its suggested that the Balassa Index and the two corresponding multiplicative normalised variants are more consistent and robust for RCA analysis.
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Date of creation: Nov 2011
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Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
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