Revealed comparative advantage and economic development with emphasis on East Asia



Publication Details

Sanidas, E. (2007). Revealed comparative advantage and economic development with emphasis on East Asia. Korea and the World Economy, VI: Towards Asian Economic Community (pp. 445-463). Korea: AKES.


Balassa's (1965) 'revealed comparative advantage' (RCA) in exports will be used to assess trade performance and economic growth in various areas of the globe with emphasis on East Asia, including South East Asia. According to ITC trade statistics and consequential calculation of the relevant RCA of the 100 largest countries in the world, and for 14 different important industrial sectors of the economy, some useful conclusions are drawn, mainly based on simple descriptive tools. There are some obvious clusters of RCA in the world. For example, clothing and textiles are mainly an RCA of Central and South Asia. These clusters also reveal that in East and South East Asia, there is substantial competition for 2-3 industries such as IT and electronics.From this analysis it becomes evident that countries with particular RCAs are at a particular stage of development as already proposed by Rostow and other scholars. In particular, Rostow's (1962) "The process of economic growth" will be an important reference. We will establish several groups of countries accordin to their stage of economic development, which are similar to those suggested by the analysis of the RCA data. We will also refer to the 'flying geese' argument for economic growth and confirm the Rostow's thesis. Korea's position will be in particular analysed and shown in relation to other countries in the region and the world. Besides, electronics, electric, and transport which are deemed to be Korea's strongholds, "surprisingly" textiles still constitute the fourth most important sector in which this country has a RCA. This is explained well with Rostow's thesis and the flying geese argument. Korea also has one of the most competitive edges in the world according to further analysis of the RCA data.

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