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Value-Added Trade and Empirical Distributions of RCA Indices

Author

Listed:
  • Kaveri Deb

    (Indian Institute of Information Technology Guwahati)

  • Bodhisattva Sengupta

    (Indian Institute of Technology Guwahati)

Abstract

Revealed Comparative Advantage (RCA) indices aid in identification of the sectors in which countries reveal comparative advantage or disadvantage. Apart from serving such a dichotomous measure, the RCA indices are frequently employed as cardinal or ordinal measures over time. Application of the indices for comparative analyses calls attention towards the distributions of RCA indices, which must reasonably be stable over time, sectors and countries. Stability of index distributions facilitates the usage of indices as cardinal or ordinal measures over time. The present paper therefore analyses the empirical distributions of RCA indices to determine their suitability. However, such an analysis would be incomplete if the implications for RCA indices due to growing significance of global supply chains are not recognized. Hence apart from analyzing the distributions of gross trade based RCA indices, the distributions of domestic value-added in export based indices are also examined, and the differences are noted. Similar extensive analyses on the distributions of RCA indices are lacking in the literature. In this sense, the present paper makes an important contribution to the existing literature on RCA indices.

Suggested Citation

  • Kaveri Deb & Bodhisattva Sengupta, 2018. "Value-Added Trade and Empirical Distributions of RCA Indices," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 235-264, March.
    • Handle: RePEc:spr:jqecon:v:16:y:2018:i:1:d:10.1007_s40953-017-0071-x
    DOI: 10.1007/s40953-017-0071-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Revealed Comparative Advantage Index; Exports; Imports; Value-added trade; Distribution; Cardinal; Ordinal;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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