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Article
Publication date: 22 March 2013

Lalit Mohan Kathuria

The textiles and clothing sector is one of India's most important economic sectors, next to the agriculture sector in terms of industrial output and employment, providing…

Abstract

Purpose

The textiles and clothing sector is one of India's most important economic sectors, next to the agriculture sector in terms of industrial output and employment, providing employment to more than 30 million people. Many studies predict that India will get a significant share of the world textiles and clothing trade due to the advantage of cheap labor and other factor resources but India's slower growth rate, as compared to other low‐cost competitors, indicates otherwise. The purpose of this paper is to analyze the comparative advantage of India and Bangladesh for the clothing sector in the world export trade with the help of Balassa's index of Revealed Comparative Advantage (RCA). The study highlights the shift in comparative advantage for India and Bangladesh between two periods. The study also points out constraints restricting the growth of export share of India in world market and offers suggestions to policy makers for enhancing India's export share in the world clothing trade.

Design/methodology/approach

RCA indices have been calculated for various clothing product categories (under Harmonized System) up to four digit classification with the help of Balassa's relative measure for India and Bangladesh. Tables have been prepared for India and Bangladesh, highlighting products having comparatively higher revealed comparative advantage. For calculation of RCA indices, the export data have been taken from “UN Comtrade”, an electronic database of the United Nations and from the database of the World Trade Organization (WTO). Further, Spearman rank correlation coefficient has been calculated for analyzing the changes over the period 1995‐2003 for India and Bangladesh.

Findings

Findings reveal that the number of products for which India enjoyed the comparative advantage increased from 23 products to 25 products between 1995 and 2003 and for Bangladesh, this number increased from 21 products to 29 products between 1995 and 2003. Clothing exports of India and Bangladesh are classified on the basis of comparative advantage at the HS 4‐digit level for the years 1995 and 2003 and the comparative position is given on the basis of a measure of structural change in exports of India and Bangladesh. The products in which India and Bangladesh have comparative advantage in garment exports are highlighted.

Originality/value

This paper has calculated and compared revealed comparative advantage indices over a period of time up to four digits classification of HS product categories. Also, this paper highlights constraints, and offer suggestions which would be helpful to exporters and policy makers.

Details

Competitiveness Review: An International Business Journal, vol. 23 no. 2
Type: Research Article
ISSN: 1059-5422

Keywords

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Article
Publication date: 15 July 2019

Zahra Saki, Marguerite Moore, Ivan Kandilov, Lori Rothenberg and A. Blanton Godfrey

The purpose of this study is to identify US textile and apparel (TAP) products and categories that demonstrate export comparative advantage and their respective country…

Abstract

Purpose

The purpose of this study is to identify US textile and apparel (TAP) products and categories that demonstrate export comparative advantage and their respective country destinations.

Design/methodology/approach

Revealed comparative advantage (RCA) and normalized revealed comparative advantage (NRCA) in the long term (1996-2016) and short term (2010-2016) using two-digit Harmonized Commodity Description and Coding System codes (HS codes) provide an insight into export advantage of TAP products. Non-parametric rank correlation (i.e. Spearman rank correlation) tests consistency between RCA and NRCA. Subsequently, NRCA using four-digit HS codes identify textile sub-categories with export comparative advantage. Bilateral trade data identify export destinations for sub-categories that indicate US export comparative advantage in the short term.

Findings

Aggregated product-level comparison of RCA and NRCA ranking indicates a consistent positive correlation between the two indices. The disaggregated findings reveal cotton fiber HS5201, artificial filament tow HS5502, non-wovens HS5603, cotton yarn HS5205, carpet and other floor coverings HS5703 and worn clothing HS6309 as sources of US TAP export advantage.

Originality/value

This research provides a comprehensive, current analysis of the US competitive position within the TAP global environment. Incorporation of NRCA into the study’s design demonstrates the flexibility of this measure in a new industry context.

Details

Competitiveness Review: An International Business Journal , vol. 29 no. 4
Type: Research Article
ISSN: 1059-5422

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Article
Publication date: 15 October 2018

Lalit Mohan Kathuria

Manufacturing sector plays a vital role in the economy of developing countries like India. The Indian textiles and clothing industry has an overwhelming presence in the…

Abstract

Purpose

Manufacturing sector plays a vital role in the economy of developing countries like India. The Indian textiles and clothing industry has an overwhelming presence in the economic life of the country. The readymade garment segment contributes 42 per cent of the Indian textiles exports, which include cotton garments and accessories, manmade fiber garments and other textiles clothing. The overall export basket of India has increased from 13.6 per cent in 2014-15 to 15 per cent in 2015-16 for textiles and apparel products including handicrafts. Though clothing exports from India have witnessed high growth rates in the past decade as compared to other commodity exports, India’s performance, when compared to many competing countries, has not been much encouraging. India has lagged behind in clothing exports as compared to China, Bangladesh and Vietnam. This study mainly focused on analyzing the changing clothing export structure of select countries such as India, China, Bangladesh, Vietnam and Turkey by using revealed comparative advantage indices.

Design/methodology/approach

This study uses different variants of revealed comparative advantage indices, namely, Balassa’s RCA Index (Balassa, 1965), Dynamic RCA index (Kreinin and Plummer, 1994) and Revealed Symmetrical Comparative Advantage Index (Laursen, 1998). Indices were calculated for the period 2003 and 2013 under knitted category (HS 61) and not knitted category (HS 62) up to four-digit classification. Spearman rank correlation was applied for analyzing changes during the period under study. For calculation of RCA and dynamic RCA indices, the export data have been taken from UN Comtrade, an electronic database of United Nation and International Trade Statistics database of World Trade Organization.

Findings

The results highlighted that India ranks at the bottom in seven HS 61 clothing products and fourth in five HS 61 products. Bangladesh stands at the top in 11 of the HS 61 clothing products among selected countries. Similarly, Vietnam has also gained stronghold position in the global clothing trade. In many of these products, Bangladesh has higher revealed comparative advantage as compared to other countries. In HS 62 product category, India was at the bottom in eight products, whereas Bangladesh has gained the most in nine products on the comparative advantage basis. The findings highlighted the shift taking place in global clothing trade structure as trade was shifting toward low-cost countries such as Vietnam and Bangladesh. Surprisingly, India has foregone strategic advantage in many value-added products to low-cost countries such as Bangladesh and Vietnam.

Originality/value

This is one of the few studies undertaken to analyze comparative advantages of leading clothing exporter countries (mainly from Asian region) in the recent times. Findings depict changing export structure and dynamics of clothing exports in the region. Findings would help government, industry associations and policymakers in enhancing sector competitiveness and in identifying the growth products.

Details

Competitiveness Review: An International Business Journal, vol. 28 no. 5
Type: Research Article
ISSN: 1059-5422

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Article
Publication date: 2 October 2007

Belay Seyoum

The purpose of this paper is to analyze the competitiveness of selected services: business, financial, transport and travel services in developing countries in relation to…

Abstract

Purpose

The purpose of this paper is to analyze the competitiveness of selected services: business, financial, transport and travel services in developing countries in relation to that of the rest of the world based on three indices of revealed comparative advantage.

Design/methodology/approach

The study uses revealed comparative advantage (RCA) indices to measure developing countries' comparative advantages in selected services for the period 1998‐2003.

Findings

Strong comparative advantages exist for many developing countries in transport, and travel services. There is substantial room for improvement in financial and business services. Trade liberalization and lack of adequate preparation appears to have resulted in a weakening of their comparative advantages over the years. However, their revealed comparative advantages remain, by and large, stable and do not show a fundamental shift in the structure of their comparative advantages.

Originality/value

There are no studies examining developing countries' comparative advantages in services. The findings and policy recommendations can be used by developing countries to improve the competitiveness of their service sectors.

Details

Journal of Economic Studies, vol. 34 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 29 November 2018

Javeria Maryam, Umer Jeelanie Banday and Ashok Mittal

In the recent international scenario, the rise of emerging economies, in particular, Brazil, Russia, India, China and South Africa (BRICS) has gained ample of attention…

Abstract

Purpose

In the recent international scenario, the rise of emerging economies, in particular, Brazil, Russia, India, China and South Africa (BRICS) has gained ample of attention. The global trade flows of the BRICS countries have significantly increased during the last one-and-a-half decade. The purpose of this paper is to examine the intra-BRICS and BRICS–EU trade flows.

Design/methodology/approach

To study the intensity of trade among BRICS countries and with EU, the Trade Intensity Index is employed for the period 2001–2015. Balassa’s revealed comparative advantage (RCA) index is computed for the assessment of comparative advantages of exports by BRICS countries in the year 2015 in the global markets. A comparative analysis of export similarity is done for India and other BRICS countries in EU.

Findings

The findings of trade intensity showed large bilateral trade flows among BRICS member. Russia has emerged as the main trading partner with EU in BRICS. For the year 2015, the comparative study of RCA at HS-two digits and HS-four digits classification highlights marginal structural changes in the export composition of these countries. The analysis revealed that Brazil and Russia have comparative advantages in natural resource-based products, while India and China possessed comparative advantages in manufactured and processed products. The export similarity index shows the presence of competition between India and China in EU.

Practical implications

This paper highlights the need for closer cooperation to promote intra-BRICS trade and to make structural transformations in the basket of trading products by them to have trade benefits at large.

Originality/value

Numerous studies are available on bilateral trade of BRICS members. However, limited studies are available to get a holistic view of intra-BRICS trade. This paper is an attempt to examine the BRICS countries trade profile both at global levels and within the group.

Details

International Journal of Emerging Markets, vol. 13 no. 5
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 15 March 2013

Kulapa Supongpan Kuldilok, P.J. Dawson and John Lingard

Thailand dominates world exports of canned tuna with a market share of around 40 percent which is at least four times higher than any other exporter. The aim of this paper…

Abstract

Purpose

Thailand dominates world exports of canned tuna with a market share of around 40 percent which is at least four times higher than any other exporter. The aim of this paper is to examine the export competitiveness of the canned tuna export industry in Thailand for 1996‐2006.

Design/methodology/approach

The paper uses a revealed comparative advantage (RCA) approach and calculates RCA indices for both major exporters in the world market and competitors in individual export markets.

Findings

Thailand has comparative advantages in all major export markets; these have remained stable in the USA, the Middle East, Japan and Canada but have fallen substantially in Australia.

Practical implications

First, Thailand urgently needs to consider tuna farming. Second, smaller processing and fishing companies should merge to increase profit margins and market share. Third, Thailand should engage in effective trade negotiations with importers. Fourth, stock management and conservation could be used to support the industry. It is unlikely that current levels of comparative advantage can be maintained because of import tariffs, rules of origin, labour shortages and increasing unskilled labour costs.

Social implications

Tuna management and conservation in Thailand could be used to support the sustainability of the industry.

Originality/value

By contrast to Kijboonchoo and Kalayanakupt who find that Thailand's market share declined between 1987‐1998 and revealed comparative advantage fell, these results show that this declining trend has since been arrested.

Details

British Food Journal, vol. 115 no. 3
Type: Research Article
ISSN: 0007-070X

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Article
Publication date: 15 May 2017

Pornlapas Suwannarat

This study aims to fundamentally focus on the comparative advantage measurement and the trend of change in the international competitiveness of five Thai economic products…

Abstract

Purpose

This study aims to fundamentally focus on the comparative advantage measurement and the trend of change in the international competitiveness of five Thai economic products exporting to the People’s Republic of China during the first half of the 2010s via the analysis of the revealed comparative advantage (RCA) index and market share.

Design/methodology/approach

The RCA index has been computed to show the comparative advantages of the product to a certain extent: whether it is cost-effective to produce that product in a certain location compared to opportunity cost of the resources in producing that product. The data set of number and value of five important export products from Thailand to China during 2010-2013 has been obtained from the Thai Ministry of Commerce and Thai-Chinese Business Information Centre.

Findings

The study reveals that of these five important economic products, cassava has the highest comparative advantage and continues to have a rapid growth trend, whilst computer equipment and components have been shown to have comparative disadvantage and the lowest comparative advantage index scores.

Research limitations/implications

Measuring with various sophisticated indices may provide clearer results. Also, according to unavailability of data set, the four-year period may not be able to show the long-term trend of competitiveness. Future studies are encouraged to study in the longer-term period with numerous indices.

Practical implications

The research also provides policy implications and measures to develop each sector to enhance competitiveness.

Originality/value

This is the original attempt to use both indices to assess the competitiveness of important Thai exports to the Chinese market.

Details

Competitiveness Review: An International Business Journal, vol. 27 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

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Article
Publication date: 16 October 2017

Shujaat Abbas and Abdul Waheed

Pakistan’s natural endowment of labour and land is suitable for labour-intensive agriculture and manufacturing sector. This study aims to investigate international trade…

Abstract

Purpose

Pakistan’s natural endowment of labour and land is suitable for labour-intensive agriculture and manufacturing sector. This study aims to investigate international trade competitiveness of Pakistan in 14 major industries of agriculture and manufacturing sector, accounting more than 85 per cent of total export receipts.

Design/methodology/approach

The competitiveness of Pakistan in selected industries of agriculture and manufacturing sectors from 2003 to 2014 is investigated using the revealed comparative advantage (RCA) index, introduced by Balassa (1965) on HS data collected from the United Nations Commodity Trade database. The obtained indices in this study are then subjected to panel regression analysis to investigate the effect of domestic productivity growth and real exchange rate on international trade competitiveness of major industries.

Findings

The results show that the agriculture sector of Pakistan has higher comparative advantage in raw cotton, cereals, raw leather and fruits. The raw cotton shows the highest competitiveness of 54.46 which is followed by cereals (17.13), leather (9.83) and fruits (1.97). The RCA of the manufacturing sector shows that textile (54.85), carpets (10.72), sports goods (2.18) and beverages (1.47) have higher competitiveness. The RCA, in relatively capital-intensive industries, shows a high disadvantage. The trend analysis shows distorted competitiveness in labour-intensive, textile, carpet and footwear industries. The results of panel regression analysis show that the domestic productivity growth and real exchange rate depreciation have a significant positive impact on the international competitiveness of selected industries. The study urges Pakistan to make its macroeconomic environment investment-friendly and encourage investment in deteriorating labour-intensive industries.

Practical implications

Globalisation has significantly increased international competition, and Pakistan is losing its competitiveness in labour-intensive industries owing to lack of domestic value addition and development efforts. The major problem with the productivity of these industries is the lack of proper infrastructure, acute energy crisis, lack of domestic and foreign investment and overvaluation of real exchange rate. The domestic investors are shifting their capital either to other domestic sectors and/or other investment-friendly countries. Policymakers in Pakistan should address the problems of these important labour-intensive industries. The government needs to understand macroeconomic uncertainties and make investment-friendly policies to encourage domestic and foreign investment. The future studies should perform in-depth research to identify both microeconomic and macroeconomic variables responsible for deterioration in competitiveness of major labour-intensive industries in the agriculture and manufacturing sectors of Pakistan.

Originality/value

This study is a comprehensive examination into the nature and pattern of international competitiveness of Pakistan in 14 important industries of the agriculture and manufacturing sector which has seldom been investigated empirically. The obtained indices in this study are also subjected to panel regression analysis to explore the effect of domestic productivity growth and real exchange rate depreciation on the international competitiveness of Pakistan.

Details

Competitiveness Review: An International Business Journal, vol. 27 no. 5
Type: Research Article
ISSN: 1059-5422

Keywords

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Article
Publication date: 3 August 2010

Ananda Jayawickrama and Shandre M. Thangavelu

The purpose of this paper is to examine the trade linkages and degree of export competitiveness between Singapore, China and India.

Abstract

Purpose

The purpose of this paper is to examine the trade linkages and degree of export competitiveness between Singapore, China and India.

Design/methodology/approach

Balassa's export performance index and the dynamic RCA index was adopted, as suggested by Kreinin and Plummer to identify the revealed comparative advantage (RCA) of the above countries in industrial products by SITC 1‐ and 2‐digit levels. The Spearman's rank correlation coefficient is used to identify the degree of complementarity between RCA indices.

Findings

Given the abundant resources, China and India have comparative advantage in a broad range of manufactured goods as compared to Singapore. From the disaggregated analysis at 2‐digit level, the paper finds that the Singapore and China exports are complements, although the degree of complementarity has being declining over time. Meanwhile, Singapore and India exports are found to be stronger complements and stable over time. The results also show that China and India exports are strong substitutes. The paper also finds that the export specialization of China and India has experienced significant changes and shifting to new export products over time.

Originality/value

Given the recent trade agreements between China and Singapore and India and Singapore, it is important to examine the trade linkages (complementarity/substitutability of trade) between these countries. The paper highlights the importance of China and India in complementing countries such as Singapore as it climbs the technological ladder to maintain its competitiveness in the world market.

Details

Journal of Economic Studies, vol. 37 no. 3
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 30 October 2007

Kirit Vaidya, David Bennett and Xiaming Liu

The paper assesses the extent to which China's comparative advantage in manufacturing has shifted towards higher‐tech sectors between 1987 and 2005 and proposes possible…

Abstract

Purpose

The paper assesses the extent to which China's comparative advantage in manufacturing has shifted towards higher‐tech sectors between 1987 and 2005 and proposes possible explanations for the shift.

Design/methodology/approach

Revealed comparative advantage (RCA) indices for 27 product groups, representing high‐, medium and low‐tech sectors have been calculated. Examination of international market attractiveness complements the RCA analysis. Findings for selected sectors are evaluated in the context of other evidence.

Findings

While China maintains its competitiveness in low‐tech labour intensive products, it has gained RCA in selected medium‐tech sectors (e.g. office machines and electric machinery) and the high‐tech telecommunications and automatic data processing equipment sectors. Evidence from firm and sector specific studies suggests that improved comparative advantage in medium and high‐tech sectors is based on capabilities developing through combining international technology transfer and learning.

Research limitations/implications

The quantitative analysis does not explain the shifts in comparative advantage, though the paper suggests possible explanations. Further research at firm and sector levels is required to understand the underlying capability development of Chinese enterprises and the relative competitiveness of Chinese and foreign invested enterprises.

Practical implications

Western companies should take account of capability development in China in forming their international manufacturing strategies. The rapid shifts in China's comparative advantage have lessons for other industrialising countries.

Originality/value

While RCA is a well‐known methodology, its application at the disaggregated product group level combined with market attractiveness assessment is distinctive. The paper provides a broad assessment of changes in Chinese manufacturing as a basis for further research on capability development at firm and sector levels.

Details

Journal of Manufacturing Technology Management, vol. 18 no. 8
Type: Research Article
ISSN: 1741-038X

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