Munich Personal RePEc Archive

On Empirical Distribution of RCA Indices

Deb, Kaveri and Sengupta, Bodhisattva (2016): On Empirical Distribution of RCA Indices.

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Abstract

Revealed Comparative Advantage (RCA) indices form an integral part of the application of trade theory. The indices help in identifying the comparative advantage or disadvantages of countries in various products and thus aid the policy makers in formulation of policies oriented towards export expansion. However, given the application of such indices as cardinal or ordinal measures over time, an important question that arises is how reliable such indices are for the said purposes. In this regard, stability of index distributions has important implications for applicability of the indices as cardinal or ordinal measures over time. This paper therefore makes an important contribution to the literature by trying to analyze the stability of empirical distributions of RCA indices and identify the index that would be most reliable as a cardinal or ordinal measure, among alternative RCA indices suggested in the literature. .

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