Revealing Comparative Advantage: Chaotic or Coherent Patterns Across Time and Sector and U.S. Trading Partner?

Abstract

We map United States comparative advantage between 1980 and 1995, by trading partner and region, using Balassa's export-based index of Revealed Comparative Advantage (RCA). We find: temporally stable and ubiquitous US comparative advantage in differentiated producer goods (except disadvantage in Japan); somewhat less stable and less sweeping US disadvantage in standardized producer goods; chaotic and diverse patterns of US RCA in consumer goods (especially in the Chinese market). Our most significant findings are surprisingly sharp geographical differences in patterns of US RCA and surprisingly small differences across sub-sectors of 1, 2, and 3-digit SITC classificationsregional, but not sectoral, "niche" specialization. The high overall variability across regions in RCA indexes seems unrelated to obvious explanations such as proximity or lingual/historical ties to the US. In producer goods, RCA variability across regions correlates somewhat better with accounts of trade diversion and of regional preferences for and discrimination against US exports. We find only scant evidence of high or increasing variability across disaggregated commodity subgroups in US RCA indexes. Such variability is often the prediction of theories of comparative advantage that are based on vertical specialization, product differentiation, or scale and agglomeration economies.

An Analysis of India-Bahrain Trade Relations

“…According to J.P.Joshi, "as many as 42 items of trade between India and the Gulf have been identified which include silver, copper, tortoise shell, ivory, cloth, carnelian, pearls, tin and precious stones". Richardson & Zhang (1999) have used the Balassa index of RCA for the U.S to analyse the patterns of variation across time, sectors and regions. They find the patterns to differ across different parts of the world, over time as also for different levels of aggregation of the export data.…”

Trade Compatibility between India and ASEAN Countries

“…Ferto and Hubbard (2002) used these modifications of the RCA index in the context of agricultural trade between Hungary and EU. Other important studies based on RCA approach include Yeats (1997), Richardson and Zhang (1999), Yue (2001), Bender and Li (2002), Weiss (2004), Lall and Albaladejo (2003) and Lall and Weiss (2004).…”

The Analysis of Agricultural Products Export Competitiveness of the Republic of Serbia Based on the RCA Index

“…It can be concluded that recent further increases in Mercosur's tariffs against nonmembers are likely to exacerbate the magnitude of trade diversion. Richardson and Zhang (1999) compared US export performance between 1980 and 1995 using Balassa's export-based index of Revealed Comparative Advantage with 38 of its large trading partners, aggregating them into six regional groups, except China and Japan that are treated separately. They found temporally stable and ubiquitous US comparative advantage in differentiated producer goods (except disadvantage in Japan); somewhat less stable and less sweeping US disadvantage in standardised producer goods; and chaotic and diverse patterns of US RCA in consumer goods (especially in the Chinese market).…”