Revealed Comparative Advantage and the Alternatives as Measures of International Specialisation

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Abstract

The paper is an analysis of Balassa’s ‘revealed comparative advantage’ (RCA). The papers shows that when using the RCA, it should always be adjusted in such a way, so that it becomes symmetric. The conclusion is based on a theoretical discussion of the properties of the measure, but also on convincing empirical evidence, based on the Jarque-Bera test of normality of the error terms from regressions, using both the RCA and the ‘Revealed Symmetric Comparative Advantage’ (the RSCA). The RSCA is also compared to other measures of international trade specialisation. These measures included the Michaely index and the chi square measure. The conclusion emerging from the analysis is that the RSCA is - on balance - the best measure of comparative advantage.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherDRUID - Danish Research Unit for Industrial Dynamics
Number of pages24
ISBN (Print)8778730694
Publication statusPublished - 1998
SeriesDRUID Working Paper
Number98-30

Cite this

Laursen, K. (1998). Revealed Comparative Advantage and the Alternatives as Measures of International Specialisation. DRUID - Danish Research Unit for Industrial Dynamics. DRUID Working Paper, No. 98-30