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The Dynamics of Comparative Advantage in the ASEAN Region

Setyastuti, Rini and Adiningsih, Sri and Widodo, Tri (2018): The Dynamics of Comparative Advantage in the ASEAN Region.

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Abstract

The performance of a country’s in international trade changes depending on its dynamic comparative advantage. The country with a rapid catching-up process has generally also shown a rapid structural transformation. This article addressed to answer two questions. How does the shift in comparative advantage or specialization in the ASEAN region? What is the exact position of countries in the Flying Geese model? We use data on exports and imports by commodities and by exporting countries taken from UN-COMTRADE. The classification of commodities follows 3-digit SITC Revision 2, consisting of 239 groups of products (SITC). The products mapping is constructed by using the RSCA (Revealed Symmetric Comparative Advantage) as the indicator of comparative advantage and TBI (Trade Balance Index) as the indicator of export import activities. The analytical tool, “products mapping” is used to examine the flying gees pattern. The results show that ASEAN featured product in 1990 was dominated by SITC 0 product (food and live animals), after twenty five years by 2015 SITC 7 (machinery and transportation) products are relatively more dominant in ASEAN export products. In 1990-2015 period, it is shown that the average magnitude of RSCA in ASEAN countries has decreased followed by an increase in the standard deviation value. It indicates that the occurance of product specialization that has a high comparative advantage and a decline in products that have low comparative advantages. Using a significance level 5%, it appears that ASEAN countries as a whole are experiencing significant dynamic changes in comparative advantage. From the pattern of Flying Gees, it can be said that the process of “catch up” in ASEAN member countries is not running as expected because the country that leads in the composition of flying gees only consists of certain countries only, namely Singapore, Malaysia, Indonesia, Thailand and Philippines.

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