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Revealed Comparative Advantage and

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The paper is an analysis of Balassa’s ‘revealed comparative advantage’ (RCA). The papersshows that when using the RCA, it should always be adjusted in such a way, so that itbecomes symmetric. The conclusion is based on a theoretical discussion of the properties ofthe measure, but also on convincing empirical evidence, based on the Jarque-Bera test ofnormality of the error terms from regressions, using both the RCA and the ‘RevealedSymmetric Comparative Advantage’ (the RSCA).The RSCA is also compared to other measures of international trade specialisation. Thesemeasures included the Michaely index and the chi square measure. The conclusion emergingfrom the analysis is that the RSCA is - on balance - the best measure of comparativeadvantage.

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Keld Laursen

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