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Globalization Challenges to Egypt’s Production SectorsRevealed Comparative AdvantagesTable (3.14), which presents the results ofapplying the technique of RCA to figures ofexports for each country in our sample,shows that the same phenomenon, ofprimary commodity bias in Egyptian trade,manifests itself when the structure ofcommodity groups in which Egypt has arevealed comparative advantage is explored.Even the Philippines, that has a lowersnumber of products with RCA than Egypt,has a more diversified structure with goodpresentation in the high-knowledgecategories of machinery and equipment.Most of the commodities in which Egypthas RCA are natural resource-intensive orlabor-based industries. The relative highestcommodity group in which Egypt enjoys thegreatest number of commodities with RCA,in comparison to those of other countries forthe same group, is the ‘mineral fuels,lubricants and related materials’ group.Petroleum and its products belong to thisgroup. This RCA in petroleum and itsproducts is not expected to be sustainable inthe long run. And the lowest RCAprevailing in the relative structure ofEgyptian merchandise is the ‘machinery andtransport equipment’ group. This is thegroup with a continuously increasing sharein world trade.During the first half of the 1990s, thenational income of Egypt had experienced aloss of almost 2 per cent, due to thedeterioration in the terms of trade for theresource-based products that Egypt tradesin. High rates of innovation of man-madesubstitutes for natural resource - basedproducts constitute a major challenge thatconfronts trade in products with high naturalcontent. That is to say, the higher the shareof primary resource-based products inEgypt's export structure, the more the loss incompetitiveness and income the economy isexposed to. The first category in whichEgypt has the highest number ofcommodities with RCA is ‘manufacturedgoods classified chiefly by materials’, inwhich the groups of ‘textiles’ and ‘wearingapparel’ are included. For these two groups,Egypt enjoys international competitiveness,yet to a lower degree for apparel comparedto textiles.Domestic CompetitivenessImports competing with domestic productsrepresent a threat that becomes tangiblewhen the policy of economic openness ispursued at high speed. In this situation,consumer demand develops more rapidlythan the capacity of local firms. Domesticsuppliers begin to lose their internalmarkets, thereby allowing a continuousincrease in the foreign component ofdomestic consumption. If local firms fail todominate their own domestic markets, theywould presumably have little chance tocompete internationally.If local firms fail todominate their owndomestic markets,they wouldpresumably have littlechance to competeinternationally.Table (3.14)Manufacturing Outputs’ Structure (1995)Export Categories0123456789TotalChina43229763110944900361Egypt230258215490170139Indonesia3112786124311412182Korea1001110227545401205Malaysia1211778113136280151Morocco Philippines Thailand350252353923401451611622726133331193842543165841611251Tunisia1741542113214490148Turkey4443526168917500263*ISIC classification: Food, beverage, and tobacco (31) - Textiles, wearing apparel, leather, and footwear (32) - Wood and wood products, including furniture(33) - Paper and paper products, printing and publishing (34) - Chemicals (35) - Non-metallic minerals (36) - Basic metals (37) - Metal products, machineryand equipment (38) - Other manufacturing industries (39)... Figures are not available.Egypt Human Development Report 2000/2001 - 53