Revealed Comparative Advantage and Sustainable Export Competitiveness of Firms in the East African Community
1Dr. Olyanga Anthony Moni, 2Mukundane Proscovia, 3Muhire Francis
1,2,3Faculty of Energy Economics and Management Sciences, Makerere University Business School
https://doi.org/10.47191/jefms/v8-i3-11ABSTRACT:
The purpose of this paper is to examine the influence of revealed comparative advantage as a determinant of the sustainability of export competitiveness of firms in the East African Community (EAC). The study adopted the Balassa’s measure of Revealed comparative advantage index model. The researcher computed the major trade outcome indicator of competitiveness on the data from 2003 to 2022. The study based on the top ten exports for each country to assess the competitiveness of a country`s overall basket of products as well as the specific sectors. Data was obtained from World Bank International Trade Centre (ITC) and World Bank development indicators. The results indicate that overall, the EAC countries have Revealed Comparative advantage in natural resource and primary products though the composition could be changing. The low RCA in other sectors reflect the lack of structural transformation which could explain a given considerable proportion of trade diversion and potential welfare losses in the EAC countries, reducing the sustainability of export competitiveness of firms in the foreign markets. Exporting countries need to take deeper reforms as regards structural transformation to enable firms to integrate into the Global Value Chains (GVCs) to enable them to increase their productivity by reviewing the existing policies to match the changes in the market. There is a need to examine the complicated nature of the EAC economy to further this study’s findings. This study explains the complex nature of the revealed comparative index as an indicator of sustainability of competitiveness in the EAC using quantitative data and that this complexity has an effect on the export competitiveness in import-oriented countries with less harmonization in their trade policies.
KEYWORDS:
Export competitiveness, Revealed Comparative Advantage index, East African Community.
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