REGIONAL COOPERATION AND ECONOMIC INTEGRATION

2.3. Comparative advantages
REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION
The results from the previous parts of the paper show that the period of transition was
characterized by a significant increase in the openness and the volume of international trade.
The key question in this part of the paper is: does an increase in openness in international
trade correspond to positive changes in trade structure A positive change in the trade
structure implies a change of comparative advantages towards higher value added sectors
and products as well as a higher level of trade specialization. In this part, comparative
advantages are analyzed while trade specialization is analyzed in the following part of the
paper.
The comparison of comparative advantages for selected south-eastern European countries
is analysed by the RCA indicator. The empirical results are displayed in table 2.
Table 2: The RCA indicator in 2006
Bosnia and
Serbia and
Sectors
Croatia Macedonia
Herzegovina
Montenegro
Machinery -0.36 -0.42 -1.50 -0.99
Base metal 0.36 -0.36 0.84 0.40
Textiles -0.23 -0.17 0.17 -0.20
Foodstuffs -1.45 -0.17 0.05 -0.14
Wood 0.82 0.18 -0.93 -0.27
Mineral -0.40 -0.38 -0.69 -0.94
Miscellaneous manufactured
articles 0.62 -0.21 -0.95 -0.43
Vehicles -1.39 -0.78 -2.03 -1.26
Plastics -1.07 -0.42 -2.83 -0.23
Chemical -0.87 -0.70 -2.34 -0.90
Footwear 0.43 -0.01 0.36 0.15
Skins, leather -0.12 0.01 -0.76 -0.87
Pulp of wood, paper -0.95 -0.50 -2.85 -1.00
Stone, plaster, cement -1.74 -0.42 -1.05 -1.08
Animal products -2.06 -0.61 -0.67 -0.88
Precision instruments -1.17 -1.44 -2.40 -1.37
Vegetable products -1.13 -0.57 -0.11 0.70
Natural or cultured pearls 0.51 -0.64 - 0.40
Animal or vegetable fats and
oils
-0.90 -0.53 - -0.46
Arms and ammunition 1.22 - - 0.20
Source: COMEXT, own calculations.
All observed countries, except Croatia, have comparative advantages in base metal and
articles of base metal, footwear, natural or cultured pearls, arms and ammunition. Bosnia
and Herzegovina is the only one that has comparative advantages in miscellaneous
manufactured articles. Unlike Macedonia and Serbia and Montenegro, Bosnia and
Herzegovina and Croatia have comparative advantages in trade with wood. Conversely,
Macedonia and Serbia and Montenegro have comparative advantages in trade with vegetable
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