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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 24, No. 1, pp.21-50
ISSN: 1225-0279 (Print)
Print publication date 28 Feb 2011
Received 23 Aug 2010 Revised 22 Nov 2010 Accepted 09 Dec 2010

Convergence towards the Revealed Comparative Advantage Neutral Point for East Asia: Similarities and Differences between the Three Countries

Elias Sanidas ; Yousun Shin
Corresponding Author, Associate Professor, Economics Department, Seoul National University, Seoul 151-746, Korea, Tel: +82-2-880-6374, Fax: +82-2-886-4231 ellass@snu.ac.kr
Graduate Student, Economics Department, Seoul National University, Seoul 151-746, Korea yousunshin@gmail.com

JEL Classification: C1, C21, F10, F14

Abstract

The aim of this study is to use two main revealed comparative advantage (RCA) indices (Balassa’s and the most recent “normalized” indices) and various quantitative techniques in order to systemically and rigorously draw some conclusions as to comparative advantage (CA) of the three East Asian countries. We use both HS 2-digit and 4-digit data to see how the three countries perform in RCA from 1995 to 2008. Overall, we find that there still exists a strict hierarchy in terms of CA in the three East Asian countries, although there is also a catching up process between them with a convergence towards a more competitive structure of RCA in exports. This mainly means that Japan and Korea are already in the process of converging towards the RCA neutral point (thus sectors that had RCA in 1995 get worse and sectors that did not have RCA in 1995 get better). However, China’s position is still different from that of the other two countries (overall it might still be in the process of divergence).

Keywords:

Revealed comparative advantage, Balassa’s and normalized indices, Galtonian, Robust, Quantile regressions, Convergence, East Asia

Acknowledgments

We thank Sven Arndt for his valuable comments. We also thank participants of the 9th Korea and the World Economy Conference (Incheon 2010) where an earlier version of this paper was presented for useful comments. This research was partly supported through the corresponding author’s grant from SNU.

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