Purchasing power parity cpp example on 30 september 2010 1oz of gold sold in new york for usd 7 1 oz also sold in london for gbp 830. Revealed comparative advantage indices semantic scholar. An overview abstract this paper introduces a special issue marking the thir tieth anniversary of the publication of two classic papers in international economics, balassa 1964 and samuelson 1964. The balassasamuelson hypothesis is the proposition that this can be explained by the greater variation in productivity, between developed and less developed countries, in the traded goods sectors than in the nontradable sectors. In this database, time series are presented in level, index and growth form where the base year of real output is 2000. It is based on the ricardian comparative advantage concept it most commonly refers to an index, called the balassa index, introduced by bela balassa and mark noland 1965. Furthermore, the balassaindex is transformed to a standardized and symmetric index rsca, which has values ranging from minus one to plus one and is plotted against the trade balance index tbi. Data is got from faostats, wto, tea board of india and china. Thus, information on country trade structure can be depicted. Dec 22, 2014 despite the simplicity and appeal of the theory, it is widely acknowledged that the balassa samuelson model does not do well in explaining real exchange rates, except over very long time horizons. Countries with high productivity growth also experience high wage growth, which leads to higher real exchange rates.
This paper explores competitive advantage of yemeni export in the market of the usa. Yemen has been placed under a special situation since the arab spring in 2011. International trade is a key contributor to growth and poverty reduction. Nevertheless, balassa index bi as a measure of rca has not escaped criticism from various researchers. Overall, our within and betweendimension estimation results do not support the bs hypothesis. An empirical analysis discusses the balassa index for the oecdcountries. Long memory in the volatility of the australian all ordinaries index and the share price index futures department of econometrics and business statistics working paper series 0504. International competitiveness of chinese and indian tea. Purpose the publication of data about the specialisation of dutch exports in commodities in relation to the exports of the eu without the netherlands. Balassa index exceeding 2, to identify a countrys strong sectors in his influential book. We provide a brief analytical treatment of the basic.
This new index conceptually fits the ex ante and countrysector specific nature of the ricardian comparative advantage better than the traditional balassa index. Balassa index is widely used in the field to measure countrysector revealed comparative advantage. Bela balassa and paul samuelson independently proposed the causal mechanism for the penn effect in the early 1960s. Up until 2017 the balassa index was compared to the export of that product by the eu28. Revealed comparative advantage of ethiopian leather industry. Pdf on the empirical distribution of the balassa index. For example, the balassa index for 06 live trees and other plants, bulbs, roots and the like.
Numerous studies focused on the investigation of export competitiveness through revealed comparative advantage indices. Asian countries and the new eu member states have considerable overlap in their comparative advantage. Although also these distributions appear to be stable over time, they differ markedly. On the empirical distribution of the balassa index utrecht. Bela balassa is the author of toward renewed economic growth in latin america 5. Interpreting the balassa index is difficult, however, in view of the limited knowledge to date on the distribution of this index. A practical guide to trade policy analysis 8 presentation of gravity models.
Furthermore, the balassa index is transformed to a standardized and symmetric index rsca, which has values ranging from minus one to plus one and is plotted against the trade balance index tbi. At the macro level, past trade liberalizations have generated on average about two percentage points of additional growth per year. Free adult new comics xxx, 3d hentai videos, hentai manga and hot adult porn games. The theory of economic integration routledge revivals. For the time since the mid1980s, we find a robust negative. Real exchange rates and the balassasamuelson effect revisited. International trade project gutenberg selfpublishing. Professor balassa has been remarkably successful in covering so much ground with such care and balance, in a treatment which is neither in any way abstruse nor unnecessarily technical.
This index captures the notion that, if two countries have very similar patterns of comparative advantage, the trade barriers faced by 1seeyeats 1985 for an early critique of balassa s rca index, andvollrath 1991 andde benedictis and tamberi. About technical analysis and trading systems based on the trend intensity index. His graduate thesis revealed comparative advantage. Read, highlight, and take notes, across web, tablet, and phone. The balassa samuelson effect also known as harrod balassa samuelson effect kravis and lipsey 1983, the ricardovinerharrod balassa samuelsonpennbhagwati effect samuelson 1994, p. The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. Balassa, an economist and a retired professor of political economy at johns hopkins university who specialized in trade and development, died yesterday at his home in washington.
The concept of revealed comparative advantage as measured by the balassa index is widely used in practice to determine a countrys weak and strong sectors. Cepii working paper new revealed comparative advantage index. The idea to determine a countrys strong sectors by analyzing the actual export flows was pioneered by liesner 1958. Among the sample of countries, the usa is an exception. However, most of the studies do not test the extent to which productivity differentials explain the differences in inflation between accession countries and the euro area. A study of comparative advantage and intraindustry trade in. A note on the balassa index of revealed comparative advantage.
On the empirical distribution of the balassa index jstor. Number 190 rep1 90 bela balassa the newly industrializing developing countries after the oil crisis reprinted with permission from weltwirtschaftliches archiv, vol. Tutorial for technical analysis of trend intensity index tii how to use it, formula and setting tii trading systems on our stock charts. This paper presents a new database of revealed comparative advantage rca measures based on the recent index of rca proposed by costinot et al. This paper reconsiders the balassa samuelson bs hypothesis.
Finally, a number of simulation methodologies, which. The balassa index bi is a widely used index for evaluating a countrys trade dis advantage or specialization. They simply state that balassa index is influenced by various factors. An analysis of export trade of the austrian district burgenland article pdf available july 2016 with 3,852 reads how we measure reads. Competitive advantage of yemeni export in the us market. Economic integration project gutenberg selfpublishing. Balassa index or revealed comparative advantage, rca. Publications econometrics and business statistics monash. The indices were calculated based on the information from relevant databases of the world bank and international trade centre. Since the procedure was refined and popularized by bela balassa 1965, 1989 it is popularly known as the balassa index. It most commonly refers to an index, called the balassa index, introduced by bela.
Apr 23, 2015 the analysis of balassas rca index displayed that, among major pharmaceutical exporting countries, iran has a high degree of comparative disadvantage in pharmaceuticals. Analyzing the international competitiveness of the industry. To analyze in detail the empirical distribution of the balassa index we proceed as follows. Balassa index utrecht university school of economics. May, 20 first published in 1962, the theory of economic integration provides an excellent exposition of a complex and farreaching topic.
Many countries are, for example, producing and exporting cars. New directions in the world economy by bela balassa and a great selection of related books, art and collectibles available now at. Oct 05, 2015 the aim of this paper is to analyze the growth pattern of trade flow and trade comparative advantages of the leather industry products between some selected african economieskenya, egypt, tunisia and with particular focus on ethiopia between 2004 to 20. Irans rca index is less than one for pharmaceutical products, reflects iran has a small export share of pharmaceuticals than the total world exports. The comparative analysis of export competitiveness of exyu. Understanding the nongaussian distribution of revealed. Bela balassa author of toward renewed economic growth in. Balassa rca index, michaely index, herfindahlhirschman concentration indices, etc. Spains top export sectors do not have the competitiveness that one might expect. The impact of capital and foreign exchange flows on the. Balassa believed that supranational common markets, with their free movement of economic factors across national borders, naturally generate demand for further integration, not only economically via monetary unions but also politicallyand, thus, that economic communities naturally evolve into political unions over time. On the empirical distribution of the balassa index springerlink.
Balassa index in 1994, the year in the middle of our sample period, as. Get our stok charts, system setting scaning tools for most popular technical indicators. The concept of revealed comparative advantage is similar to that of economic base theory, which is the same calculation, but considers employment rather than exports. The available estimates of the balassa samuelson effect in central european countries range from zero to 4 percentage points per annum see table 1. We analyze an oecd country panel from 1970 to 2008 and compare three data sets on sectoral productivity, including newly constructed data on total factor productivity. The paper uses the real effective exchange rate reer4 as it has been the most widely used measure for competitiveness in the literature in recent years5. These are useful for understanding the determinants and patterns of trade and for assessing the trade effects of certain trade policies, such as wto accessions or the signing of preferential trade agreements.
Death of an empire by balassa, imre and a great selection of related books, art and collectibles available now at. The empirical distribution of the balassa index for the member states separately is the subject of section 4. For example, on average 33% of the eu industries has a balassa index above 1. The revealed comparative advantage is an index used in international economics for. His research interests include international economics, geographical economics,macroeconomics, and economic growth and development. In section iii, we consider the balassa index for the eu12 as a whole, that is, we group all observations for the different countries together.