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Revealed Comparative Advantage: What Is it Good For?

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  • Scott French

    (School of Economics, Australian School of Business, the University of New South Wales)

Abstract
This paper utilizes a many-country, many-product Ricardian trade model to evaluate the usefulness of measures of revealed comparative advantage (RCA) in academic and policy analyses. I find that, while commonly used indexes are generally not consistent with theoretical notions of comparative advantage, certain indexes can be usefully employed for certain tasks. I explore several common uses of RCA indexes and show that different indexes are appropriate when attempting to (a) evaluate the differential effect of changes in trade barriers across producers of different products, (b) identify countries who are relatively close competitors in a given market, or (c) recover patterns of relative productivity.

Suggested Citation

  • Scott French, 2014. "Revealed Comparative Advantage: What Is it Good For?," Discussion Papers 2014-39, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2014-39
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2014-39.pdf
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    More about this item

    Keywords

    Revealed comparative advantage; relative productivity; trade responsiveness; trade policy; Ricardian;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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