an analysis for india and china - icrier

that it cannot distinguish improvements in factor endowments and pursuit of appropriate
trade policies by a country.
5 Revealed Comparative Advantage - The Analysis
In this paper Revealed Comparative Advantage (RCA) analysis has been
undertaken at both the sector and product level. For the former RCA indices have been
calculated for India and China in all the 97 chapters of the Harmonized System (HS -
1996) classification for the year 2000 and 2003 2 . As it is possible that the pattern of
comparative advantage may differ across different levels of dis-aggregation and sectors
in which a country’s exports may be typically strong may often include disaggregated
sub-products in which they are not and conversely, the paper also analyses revealed
comparative advantage analysis at the more disaggregated level i.e. the 6 digit level of
HS classification. The index of RCA (RCAI) is calculated using data on exports for both
India and China as from UN COMTRADE.
below.
Broad trends that emerge from this analysis for the two countries are discussed
5.1 India
The index of RCA is greater than one for 41 sectors indicating that India holds
comparative advantage in these sectors in the world market. At the disaggregated level
RCAI is calculated for all 4664 commodities exported by India to the world in 2003. The
index values suggest that India enjoys comparative advantage in 1512 commodities. As a
percentage of total exports India enjoys comparative advantage in 32 per cent of its total
exports, the same as in 2000. India’s comparative advantage is focused in sectors like
organic chemicals, cotton iron and steel, articles of apparel accessories, not knit or
crochet etc. The commodity with the maximum comparative advantage is identified as
flat rolled products of high speed steel>/=600mm wide.
2 The focus of the analysis in the paper is on the RCA for 2003. The year 2000 is taken as reference, as this
is the year immediately preceding China’s accession to WTO.
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