On Empirical Distribution of RCA Indices

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

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. .

• Item Type: MPRA Paper
• Language: English
• Keywords: Revealed Comparative Advantage Index, Exports, Imports, Distribution, Cardinal, Ordinal.
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

References

Balassa, B. 1965. “Trade Liberalization and 'Revealed' Comparative Advantage.” Manchester School of Economics and Social Studies 33: 99-123.

Ballance, R.H., H. Forstner and T. Murray. 1987. “Consistency Tests of Alternative Measures of Comparative Advantage.” The Review of Economics and Statistics 69(1): 157-161.

Batra, A. and Z. Khan. 2005. “Revealed Comparative Advantage: An Analysis for India and China.” Indian Council for Research on International Economic Relations (ICRIER), New Delhi. Working Paper No. 168.

Benedictis, L.D. and M. Tamberi. 2001. “A Note on Balassa Index of Revealed Comparative Advantage.” Dipartmento di Economia, Universita’ Politecnica delle Marche. Working Paper No. 158.

Benedictis, L.D. and M. Tamberi. 2004. “Overall Specialization Empirics: Techniques and Applications.” Open Economies Review 15: 323-346.

Bowen, H. P. 1983. “On the Theoretical Interpretation of Indices of Trade Intensity and Revealed Comparative Advantage.” Weltwirtschaftliches Archiv 119: 464-472.

Campbell, M.J. 2006. “Teaching Non-parametric Statistics to Students in Health Sciences.” ICOTS 7, IASE, ISI, Salvador, Bahia, Brazil.

Conover, W.J. 1999. Practical Nonparametric Statistics. New Delhi: Wiley India.

Dalum, B., K. Laursen and G. Villumsen. 1998. “Structural Change in OECD Export Specialisation Patterns: Despecialisation and ‘Stickiness’.” International Review of Applied Economics 12: 423-443.

Deb, K. and P. Basu. 2011. “Indices of Revealed Comparative Advantage and their Consistency with the Heckscher-Ohlin Theory: A Cross Sectional Analysis.” Foreign Trade Review 46: 3-28.

Dimaranan, B., E. Ianchovichina and W.J. Martin. 2007. “China, India, and the Future of the World Economy: Fierce Competition or Shared Growth?” Policy Research Working Paper No. 4304, World Bank, Washington, DC.

Epanechnikov, V.A. 1969. “Non-Parametric Estimation of a Multivariate Probability Density.” Theory of Probability and Applications 14(1): 153-158.

Hart, A. 2001. “Mann-Whitney test is not just a test of medians: differences in spread can be important.” British Medical Journal 323(7309): 391-393.

Hassan, M. 2013. “An Analysis of Competitiveness of Pakistan’s Agricultural Export Commodities.” Journal of Business and Management 11: 29-34.

Hiley, M. 1999. “The dynamics of changing comparative advantage in the Asia-Pacific region.” Journal of the Asia Pacific Economy 4: 446-467.

Hinloopen, J. and C. Marrewijk. 2004. “Dynamics of Chinese Comparative Advantage”, Tinbergen Institute Discussion Paper No. 2004-034/2.

Hoen, A. R., and J. Oosterhaven. 2006. “On the Measurement of Comparative Advantage.” The Annals of Regional Science 40: 677-691.

Karaalp, H. S. 2011. “Competitiveness of Turkey in Eurasia: A Comparison with CIS Countries.” China-USA Business Review 10: 727-744.

Kijboonchoo, T. and K. Kalayanakupt. 2003. “Comparative Advantage and Competitive Strength of Thai Canned Tuna Export in the World Market: 1982-1998. ABAC Journal 23: 19-33.

Lafay, G. 1992. “The measurement of revealed comparative advantages.” In M.G. Dagenais, and P.A. Muet eds., International Trade Modeling. London: Chapman & Hall.

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

Lehmann, E.L. 2006. Nonparametrics: Statistical Methods Based on Ranks. USA: Springer.

Leromain, E. and G. Orefice. 2014. “New Revealed Comparative Advantage Index: Dataset and Empirical Distribution.” International Economics 139(2014): 48-70.

Nicita, A. and M. Olarreaga. 2007. “Trade, Production and Protection Database 1976-2004.” World Bank Economic Review 21: 165-171.

Proudman, J. and S. Rdding. 1998. Openness and Growth. UK: Bank of England.

PTI. 2015, August 18. “India’s turn to become factory of the world: China state media.” The Times of India. Accessed from http://timesofindia.indiatimes.com/business/india-business on 3.9.2015.

Smirnov, N.V. 1939. “Estimate of Deviation between Empirical Distribution Functions in Two Independent Samples.” (Russian) Bulletin Moscow University 2(2): 3-16.

Smyth, D. A. 2005. “Ireland’s Revealed Comparative Advantage.” Quarterly Bulletin. Central Bank of Ireland, Dublin 1: 101-114.

StataCorp. 2013. Stata 13 Base Reference Manual. College Station, TX: Stata Press.

Ullah, A. 1988. “Non-Parametric Estimations of Econometric Functionals.” The Canadian Journal of Economics 21: 625-658.

Vollrath, T. L. 1991. “A Theoretical Evaluation of Alternative Trade Intensity Measures of Revealed Comparative Advantage.” Weltwirtschaftliches Archiv 127: 265-280.

Wignaraja, G. 2011. “Economic Reforms, Regionalism and Exports: Comparing China and India.” East-West Centre Policy Studies 60.

Wilcoxon, F. 1945. “Individual Comparisons by Ranking Methods.” Biometric Bulletin 1: 80-83.

Yu, R., J. Cai, and P. Leung. 2009. “The Normalized Revealed Comparative Advantage Index.” The Annals of Regional Science 43: 267-282.

Yeats, A. J. 1985. “On the Appropriate Interpretation of the Revealed Comparative Advantage Index: Implications of a Methodology based on Industry Sector Analysis.” Weltwirtschaftliches Archiv 121: 61-73.