What do Alternative Measures of Comparative Advantage Reveal about the Composition of Developing Countries Exports?
Author InfoAlexander J. Yeats (The World Bank) Abstract In spite of their extensive applications in research and policy studies, no previous product level comparisons have been made between Balassa’s revealed comparative advantage index (RCA) and indices which reflect the standard Hecksher-Ohlin theory of comparative advantage. This study conducts several empirical tests relating to this point for developing countries’ exports of manufactured products. The results show that products in which developing countries have achieved a revealed comparative advantage are highly concentrated in a broad group of labour intensive products, while, for other items, their RCAs are generally below unity. However, within the labour intensive group developing countries failed to develop a revealed comparative advantage for about one-half of the items. A regression model suggests that natural resource availability, human, and physical capital requirements are constraining exports of these products. Downl
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