IDEAS home Printed from https://ideas.repec.org/a/cuf/journl/y2018v19i2karimimalekshahian.html
   My bibliography  Save this article

Ricardian Comparative Advantage: Impact of Specialization on the Exportation of Products in ASEAN Countries

Author

Listed:
  • Mohammad Sharif Karimi

    (Department of Economics,Faculty of Social Sciences, Razi University)

  • Mehran Malekshahian

    (Faculty of Economic Sciences of University Putra Malaysia)

Abstract

Aim of this research is to verify to which extent specialization affects exportation of products in six major countries of Association of Southeast Asian Nations (ASEAN) according to the traditional Ricardian theory of Comparative Advantage (CA). In this paper, firstly patterns of trade specialization of products at two-digit level of Harmonized System will be analyzed in Indonesia, Thailand, Malaysia, Singapore, Philippines, and Vietnam. Revealed comparative advantage (RCA) index and Lafay Index (LFI) are the main proxies measuring trade specialization to be calculated in this research. Afterwards we investigate the impact of specialization on the export of products in a gravity model during 1996-2011 for the whole sample and for each country separately. In order words, it is tested whether or not ASEAN export patterns are explained by Ricardian CA theory. To control for available endogeneity, heteroskedasticity, and fixed effects problems we use robust two-step Generalized Method of Moments (GMM) technique. Results of the GMM estimation suggest that specialization measured by both indices has significant positive impact on the export of products only in Philippines and Malaysia, which emphasizes on the applicability of Ricardian CA theory in these two countries.

Suggested Citation

  • Mohammad Sharif Karimi & Mehran Malekshahian, 2018. "Ricardian Comparative Advantage: Impact of Specialization on the Exportation of Products in ASEAN Countries," Annals of Economics and Finance, Society for AEF, vol. 19(2), pages 473-522, November.
    • Handle: RePEc:cuf:journl:y:2018:v:19:i:2:karimi:malekshahian
    as

    Download full text from publisher

    File URL: http://down.aefweb.net/AefArticles/aef190205KarimiMalekshahian.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    2. repec:bla:reviec:v:8:y:2000:i:3:p:373-96 is not listed on IDEAS
    3. Yue, Changjun & Hua, Ping, 2002. "Does comparative advantage explains export patterns in China?," China Economic Review, Elsevier, vol. 13(2-3), pages 276-296.
    4. Mary Amiti, 1999. "Specialization patterns in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(4), pages 573-593, December.
    5. Hirsch, Seev, 1976. "An International Trade and Investment Theory of the Firm," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 258-270, July.
    6. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    7. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    8. Harkness, Jon & Kyle, John F., 1975. "Factors influencing United States comparative advantage," Journal of International Economics, Elsevier, vol. 5(2), pages 153-165, May.
    9. Susanna Thede & Nils-Åke Gustafson, 2012. "The Multifaceted Impact of Corruption on International Trade," The World Economy, Wiley Blackwell, vol. 35(5), pages 651-666, May.
    10. Robert Ballance & Helmut Forstner & Tracy Murray, 1985. "On measuring comparative advantage: A note on Bowen’s indices," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 121(2), pages 346-350, June.
    11. Jeroen Hinloopen & Charles Marrewijk, 2001. "On the empirical distribution of the Balassa index," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 1-35, March.
    12. repec:wvu:wpaper:06-11 is not listed on IDEAS
    13. Ballance, Robert H & Forstner, Helmut & Murray, Tracy, 1987. "Consistency Tests of Alternative Measures of Comparative Advantage," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 157-161, February.
    14. Imre Fertö & L. J. Hubbard, 2003. "Revealed Comparative Advantage and Competitiveness in Hungarian Agri–Food Sectors," The World Economy, Wiley Blackwell, vol. 26(2), pages 247-259, February.
    15. Subhayu Bandyopadhyay & Suryadipta Roy, 2007. "Corruption and trade protection: evidence from panel data," Working Papers 2007-022, Federal Reserve Bank of St. Louis.
    16. Jeroen Hinloopen & Charles van Marrewijk, 2004. "Dynamics of Chinese Comparative Advantage," Tinbergen Institute Discussion Papers 04-034/2, Tinbergen Institute.
    17. Oelgemöller, Jens & Westermeier, Andreas, 2009. "RCAs within Western Europe," CAWM Discussion Papers 11, University of Münster, Münster Center for Economic Policy (MEP).
    18. James Proudman & Stephen Redding, 2000. "Evolving Patterns of International Trade," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 373-396, August.
    19. Oelgemöller, Jens & Westermeier, Andreas, 2009. "RCAs within Western Europe," University of Göttingen Working Papers in Economics 79, University of Goettingen, Department of Economics.
    20. M. V. Posner, 1961. "International Trade And Technical Change," Oxford Economic Papers, Oxford University Press, vol. 13(3), pages 323-341.
    21. Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
    22. Lin-Yeok Tan, 1992. "A Heckscherohlin approach to changing comparative advantage in singapore’s manufacturing sector," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 128(2), pages 288-309, June.
    23. Serafino Marchese & Francisco Simone, 1989. "Monotonicity of indices of “Revealed“ comparative advantage: Empirical evidence on Hillman’s condition," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(1), pages 158-167, March.
    24. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    25. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    26. Arye Hillman, 1980. "Observations on the relation between “revealed comparative advantage” and comparative advantage as indicated by pre-trade relative prices," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 315-321, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vasilii Erokhin & Gao Tianming & Anna Ivolga, 2021. "Cross-Country Potentials and Advantages in Trade in Fish and Seafood Products in the RCEP Member States," Sustainability, MDPI, vol. 13(7), pages 1-40, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Štefan Bojnec & Imre Fertő, 2008. "European Enlargement and Agro‐Food Trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 563-579, December.
    2. Abhijit Sharma & Michael Dietrich, 2004. "The Indian Economy Since Liberalisation: the Structure and Composition of Exports and Industrial Transformation (1980 – 2000)," Working Papers 2004004, The University of Sheffield, Department of Economics, revised May 2004.
    3. Levkovych, Inna, 2011. "Der ukrainische Außenhandel mit Produkten der Agrar- und Ernährungswirtschaft: Eine quantitative Analyse aus Sicht traditioneller und neuer Außenhandelstheorien," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 59, number 109520.
    4. Amador, João & Cabral, Sónia & Ramos Maria, José, 2007. "International Trade Patterns over the Last Four Decades: How does Portugal Compare with other Cohesion Countries?," MPRA Paper 5996, University Library of Munich, Germany.
    5. Jeroen Hinloopen & Charles van Marrewijk, 2004. "Empirical Relevance of the Hillman Condition and Comparative Advantage," Tinbergen Institute Discussion Papers 04-019/2, Tinbergen Institute.
    6. Liu, Bin & Gao, Jianbo, 2019. "Understanding the non-Gaussian distribution of revealed comparative advantage index and its alternatives," International Economics, Elsevier, vol. 158(C), pages 1-11.
    7. Martin Grančay & Tomáš Dudáš, 2019. "Bilateral trade flows and comparative advantage: does the size matter?," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(4), pages 397-413, December.
    8. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    9. 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.
    10. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    11. Ufuk Gunes Bebek, 2011. "Stability, Specialisation and Divergence in Export Patterns for EU15," Studies in Economics 1122, School of Economics, University of Kent.
    12. Ferto, Imre, 2008. "Comparative Advantage And Trade Competitiveness In Hungarian Agriculture," Bulletin of the Szent Istvan University 43326, Szent Istvan University, Faculty of Economics and Social Sciences.
    13. Jochem, Patrick & Schleich, Joachim, 2012. "Exploring the drivers behind automotive exports in OECD countries: An empirical analysis," Working Papers "Sustainability and Innovation" S3/2012, Fraunhofer Institute for Systems and Innovation Research (ISI).
    14. Ufuk Gunes Bebek, 2011. "Monotonicity of additive indices of revealed comparative advantage," Economics Bulletin, AccessEcon, vol. 31(2), pages 1894-1901.
    15. repec:ptu:bdpart:a200614 is not listed on IDEAS
    16. Ferto, Imre & Hubbard, Lionel J., 2003. "The Dynamics Of Agri-Food Trade Patterns - The Hungarian Case," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25851, International Association of Agricultural Economists.
    17. Jeroen Hinloopen & Charles van Marrewijk, 2004. "Dynamics of Chinese Comparative Advantage," Tinbergen Institute Discussion Papers 04-034/2, Tinbergen Institute.
    18. Beňo, Michal, 2021. "E-working: Country Versus Culture Dimension," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 13(2), June.
    19. Paas, Tiiu, 2002. "Gravity Approach for Exploring Baltic Sea Regional Integration in the Field of International Trade," Discussion Paper Series 26379, Hamburg Institute of International Economics.
    20. Ofori, Isaac K. & Dossou, Marcel A.M. & Asongu, Simplice A. & Armah, Mark K., 2023. "Bridging Africa’s income inequality gap: How relevant is China’s outward FDI to Africa?," Economic Systems, Elsevier, vol. 47(1).
    21. Halima Jibril & Stephen Roper, 2022. "Of chickens and eggs: Exporting, innovation novelty and productivity," Working Papers 027, The Productivity Institute.

    More about this item

    Keywords

    Comparative Advantage; Exports; ASEAN;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cuf:journl:y:2018:v:19:i:2:karimi:malekshahian. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Qiang Gao (email available below). General contact details of provider: https://edirc.repec.org/data/emcufcn.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.