The Revealed Comparative Advantage of Agri-Food Industries in Selected Countries in the Central and Eastern Europe: Gross-Versus Value-Added Trade Flows

Ivo Zdráhal

DOI 10.7160/aol.2024.160210
No 2/2024, June
pp. 133-150

Zdráhal, I. (2024) "The Revealed Comparative Advantage of Agri-Food Industries in Selected Countries in the Central and Eastern Europe: Gross-Versus Value-Added Trade Flows", AGRIS on-line Papers in Economics and Informatics, Vol. 16, No. 2, pp. 133-150. ISSN 1804-1930. DOI 10.7160/aol.2024.160210.

Abstract

The aim of the article is to interrogate comparative advantage of agrarian and food processing sectors in the context of the agri-food global value chains in particular countries in the Central and Eastern Europe using gross trade and value-added trade data from TiVA database. The Normalized revealed comparative advantage index (NRCA) was applied to analyze comparative (dis)advantage of agrarian and food processing sectors from 1995 to 2020. The article contributes twofold: First, NRCA pairs of indices calculated using gross trade and value-added trade data are mostly consistent. The analysis identifies for what areas and countries there is a discrepancy; second, it reveals comparative advantage of agrarian and food processing sectors in each country separately. It indicates different trajectories of development among countries in the Central and Eastern Europe. These results are complementary to the results of studies that evaluated comparative advantages on the product basis.

Keywords

Agrarian sector, food processing, fragmentation, global value chain, value-added.

References

  1. Antràs, P. (2020) "De-Globalisation? Global Value Chains in the Post-COVID-19 Age", NBER Working Papers 28115, Cambridge: National Bureau of Economic Research. ISSN 0898-2937. DOI 10.3386/w28115.
  2. Balassa, B. (1965) "Trade Liberalisation and Revealed Comparative Advantage", The Manchester School, Vol. 33, No. 2, pp. 99-123. ISSN 1467-9957. DOI 10.1111/j.1467-9957.1965.tb00050.x.
  3. Ballance, R., Fostner, H. and Murray, T. (1987) "Consistency tests of alternative measures of comparative advantage", The Review of Economics and Statistics, Vol. 69, No. 1, pp. 157-161. ISSN 0034-6535. DOI 10.2307/1937915.
  4. Blažková, I., Svatošová, V., Chmelíková, G., Tamáš, V., Svobodová, E., Grega, L., Miškolci, S., Piecuch, J., Ujj, A., Hupková, D., Puchała, J., Bazsik, I., Jancsovszka, P., Nagyné Pércsi, K., Dobošová, L. (2023) "The effects of COVID-19 crisis on small family farms: Empirical evidence from Visegrad countries", Agricultural Economics – Czech, Vol. 69, No. 9, pp. 366-374. ISSN 1805-9295. DOI 10.17221/217/2023-AGRICECON.
  5. Bojnec, Š. and Fertő, I. (2009) "Agro-food trade competitiveness of Central European and Balkan countries", Food Policy, Vol. 34, No. 5, pp. 417-425. ISSN 0306-9192. DOI 10.1016/j.foodpol.2009.01.003.
  6. Bojnec Š. and Fertő I. (2019) "Agri-food comparative advantages in the EU countries by value chains before and after enlargement towards the East", Journal of Agricultural Science, Vol. 30, No. 2, pp. 60-77. ISSN 1469-5146. DOI 10.15159/jas.19.10.
  7. Bowen, H. (1983) "On the Theoretical Interpretation of Indices of Trade Intensity and Revealed Comparative Advantage", Review of World Economics, Vol. 119, No. 3, pp. 464-472. ISSN 1610-2886. DOI 10.1007/BF02706520.
  8. Brakman, S. and van Marrewijk, C. (2017) "A closer look at revealed comparative advantage: Gross-versus value added flows", Papers in Regional Science, Vol. 96, No. 1, pp. 61-92. ISSN 1435-5957. DOI 10.1111/pirs.12208.
  9. Carraresi, L. and Banterle, A. (2015) "Agri-food Competitive Performance in EU Countries: A Fifteen-Year Retrospective", International Food and Agribusiness Management Review. Vol. 18, No. 2, pp. 37-62. ISSN 1559-2448. DOI 10.22004/ag.econ.204135.
  10. Ceglowski, J. (2017) "Assessing Export Competitiveness through the Lens of Value Added", The World Economy, Vol. 40, No. 2, pp. 275-296. ISSN 1467-9701. DOI 10.1111/twec.12362.
  11. Constantinescu, C., Mattoo, A. and Ruta, M. (2015) "The Global Trade Slowdown: Cyclical or Structural?", The World Bank Economic Review, Vol. 34, No. 1, pp. 121-142. ISSN 1564-698X. DOI 10.1093/wber/lhx027.
  12. Čechura, L., Grau, A., Hockmann, H., Levkovych, I. and Kroupová, Z. (2017) "Catching Up or Falling Behind in European Agriculture: The Case of Milk Production", Journal of Agricultural Economics, Vol. 68, No. 1, pp. 206-227. ISSN 1477-9552. DOI 10.1111/1477-9552.12193.
  13. Dalum, B., Laursen, K. and Villumsen, G. (1998) "Structural change in OECD export specialization patterns: de-specialization and stickiness", International Review of Applied Economics, Vol. 12, No. 3, pp. 423-443. ISSN 1465-3486. DOI 10.1080/02692179800000017.
  14. De Backer, K. and Miroudot, S. (2013) "Mapping Global Value Chains", OECD Trade Policy Papers, No. 159, OECD. DOI 10.1787/5k3v1trgnbr4-en.
  15. De Benedictis, L. and Tamberi, M. (2004) "Overall Specialization Empirics: Techniques and Applications", Open Economies Review, Vol. 15, No. 4, pp. 323-346. ISSN 1573-708X. DOI 10.1023/B:OPEN.0000048522.97418.99.
  16. Feenstra, R. C. (1998) "Integration of trade and disintegration of production in the global economy", Journal of Economic Perspectives, Vol. 12, No. 4, pp. 31-50. ISSN 0895-3309. DOI 10.1023/B:OPEN.0000048522.97418.99.
  17. Fertö, I. (2018) "Global Agri-food Trade Competitiveness: Gross Versus Value Added Exports", Agris on-line Papers in Economics and informatics, Vol. 10, No. 4, pp. 39-47. ISSN 1804-1930. DOI 10.22004/ag.econ.281654.
  18. Gereffi, G. (2014) "Global value chains in a post-Washington Consensus world", Review of International Political Economy, Vol. 21, No. 1, pp. 9-37. ISSN 0969-2290. DOI 10.1080/09692290.2012.756414.
  19. Giovannetti, G., and Marvasi, E. (2016) "Food exporters in global value chains: Evidence from Italy", Food Policy, Vol. 59, pp. 110-125. ISSN 0306-9192. DOI 10.1016/j.foodpol.2015.10.001.
  20. Greenville, J., Kawasaki, K. and Beaujeu R. (2017) "A method for estimating global trade in value added within agriculture and food value chains", OECD Food, Agriculture and Fisheries Papers, No. 99, OECD Publishing, Paris. E-ISSN 1815-6797. DOI 10.1787/f3a84910-en.
  21. Gereffi, G. and Fernandez-Stark, K. (2018) "Global Value Chain Analysis: A Primer (Second Edition)", In: G. Gereffi (Author) "Global Value Chains and Development: Redefining the Contours of 21st Century Capitalism", Cambridge: Cambridge University Press. pp. 305-342. ISBN 9781108559423. DOI 10.1017/9781108559423.012.
  22. Grossman, G. M. and Helpman, E. (2002) "Integration versus outsourcing in industry equilibrium", Quarterly Journal of Economics, Vol. 117, No. 1, pp. 85-120. ISSN 0033-5533. DOI 10.1162/003355302753399454.
  23. Grossman, G. M. and Rossi-Hansberg, E. (2008) "Trading tasks: A simple theory of offshoring", American Economic Review, Vol. 98, No. 5, pp. 1978-1997. ISSN 0002-8282. DOI 10.1257/aer.98.5.1978.
  24. Hamulczuk, M. and Pawlak, K. (2022) "Determinants for international competitiveness of the food industry in 43 countries worldwide: evidence from panel models", Quarterly Journal of Economics and Economic Policy, Vol. 17, No. 3, pp. 635-667. ISSN 2353-3293. DOI 10.24136/eq.2022.022.
  25. Harvey, D., Hubbard, C., Gordon, M. and Tocco, B. (2017) "How Competitive is the EU's Agri-Food Sector? An Introduction to a Special Feature on EU Agri-Food Competitiveness", Journal of Agricultural Economics, Vol. 68, No. 1, pp. 199-205. ISSN 1477-9552. DOI 10.1111/1477-9552.12215.
  26. Hinloopen, J. and van Marrewijk, C. (2001) "On the Empirical Distribution of the Balassa Index", Review of World Economics, Vol. 137, No. 1, pp. 1-35. ISSN 1610-2886. DOI 10.1007/BF02707598.
  27. Hoen, A. and Oosterhaven, J. (2006) "On the measurement of competetive Advantage", The Annals of Regional Science, Vol. 40, No. 3, pp. 677-691. ISSN 1432-0592. DOI 10.1007/s00168-006-0076-4.
  28. Hummels, D., Ishii, J. and Yi, K. M. (2001) "The nature and growth of vertical specialization in world trade", Journal of International Economics, Vol. 54, No.1, pp. 75-96. ISSN 0022-1996. DOI 10.1016/S0022-1996(00)00093-3.
  29. Ignjatijević, S., Čavlin, M. and Đorđević, D. (2014) "Measurement Of Comparative Advantages of Processed Food Sector of Serbia In The Increasing The Export", Economics of Agriculture, Vol. 61, No. 3, pp. 1-17. ISSN 2334-8453. DOI 10.22004/ag.econ.186519.
  30. Jámbor, A. (2013) "Comparative Advantages and Specialisation of the Visegrad Countries Agri-Food Trade", Acta Oeconomica et Informatica, Vol. 16, No. 1, pp. 22-34. ISSN 1335-2571. DOI 10.22004/ag.econ.144684.
  31. Jones, R. and Kierzkowski, H. (1990) "The role of services in production and international trade: A theoretical framework". In: Jones, R. and Kruegers, A. (Eds.) "The political economy of international trade", pp. 31-48. Basil Blackwell. DOI 10.1142/9789813200678_0014.
  32. Kowalski, P., Gonzalez, J. L., Ragousis, A. and Ugarte, C. (2015) "Participation of Developing Countries in Global Value Chains: Implications for Trade and Trade-Related Policies", OECD Trade Policy Papers, No. 179, OECD Publishing, Paris. DOI 10.1787/5js33lfw0xxn-en.
  33. Krugman, P., Cooper, R. N., Srinivasan, T. N. (1995) "Growing world trade: Causes and consequences", Brooking Papers on Economic Activity, Vol. 1, pp. 327-377. ISSN 0007-2303. DOI 10.2307/2534577.
  34. Lafay, G. (1992) "The measurement of revealed comparative advantages" In: Dagenais, M. G. and Muet, P.-A. (eds.) "International Trade Modelling", London: Chapman & Hall. ISBN-13 978-1475721522.
  35. Lemmers, O. and Wong, K. F. (2019) "Distinguishing Between Imports for Domestic Use and for Re-Exports: A Novel Method Illustrated for the Netherlands", National Institute Economic Review, Vol. 249, No. 1, pp. 59-67. ISSN 0027-9501. DOI 10.1177/002795011924900115.
  36. Leromain, E. and Orefice, G. (2014) "New revealed comparative advantage index: Dataset and empirical distribution", International Economics, Vol. 139, pp. 48-70. ISSN 2110-7017. DOI 10.1016/j.inteco.2014.03.003.
  37. Lim, S. (2021) "Global Agricultural Value Chains and Structural Transformation", National Bureau of Economic Research (NBER), Working Paper Series., p. 29194. ISSN 0898-2937. DOI 10.3386/w29194.
  38. Lim, S. and Kim, S. W. (2022) "Global agricultural value chains and employment growth", Journal of the Agricultural and Applied Economics Association, Vol. 1, pp. 402-418. ISSN 2769-2485. DOI 10.1002/jaa2.34.
  39. Martins Guilhoto, J., Webb, C. and Yamano, N. (2022) "Guide to OECD TiVA Indicators", 2021 edition, OECD Science, Technology and Industry Working Papers, No. 2022/02, OECD Publishing, Paris. E-ISSN 1815-1965. DOI 10.1787/58aa22b1-en.
  40. Matkovski B., Zekić S., Đokić D., Jurjević Ž. and Đurić I. (2022) "Export Competitiveness of Agri-Food Sector during the EU Integration Process: Evidence from the Western Balkans", Foods, Vol. 11, pp. 1-16. ISSN 2304-8158. DOI 10.3390/foods11010010.
  41. Mizik, T. (2021) "Agri-Food Trade Competitiveness: A Review of the Literature", Sustainability, Vol. 13, No. 20, p. 11235, pp. 1-14. ISSN 2071-1050. DOI 10.3390/su132011235.
  42. Montalbano, P. and Nenci, S. (2022) "Does global value chain participation and positioning in the agriculture and food sectors affect economic performance? A global assessment", Food Policy, Vol. 108, p. 102235. ISSN 0306-9192. DOI 10.1016/j.foodpol.2022.102235.
  43. OECD (2020) "Global value chains in agriculture and food: A synthesis of OECD analysis", OECD Food, Agriculture and Fisheries Papers, Paris: OECD Publishing. E-ISSN 1815-6797. DOI 10.1787/6e3993fa-en.
  44. Pawlak, K., Smutka, L. and Kotyza, P. (2021) "Agricultural Potential of the EU Countries: How Far Are They from the USA?", Agriculture, Vol. 11, No. 4, pp. 1-21. ISSN 2077-0472. DOI 10.3390/agriculture11040282.
  45. Pawlak, K. and Smutka, L. (2022) "Does Poland's agri-food industry gain comparative advantage in trade with non-EU countries? Evidence from the transatlantic market", PLoS One, Vol. 17, No. 9, pp. 1-32. ISSN 1932-6203. DOI 10.1371/journal.pone.0274692.
  46. Proudman, J. and Redding, S. (2000) "Evolving patterns of international trade", Review of International Economics, Vol. 8, No. 3, pp. 373-396. ISSN 1467-9396. DOI 10.1111/1467-9396.00229.
  47. Porter, M. E. (1990) "Competitive advantage of nations", Harvard Business Review, Vol. 68, No. 2, pp. 73-93. ISSN 0017-8012. DOI 10.1002/cir.3880010112.
  48. Sanidas, E. and Shin, Y. (2010) "Comparison of revealed comparative advantage indices with application to trade tendencies of East Asian countries", [Online]. Available: https://1url.cz/NMgPH [Accessed: Oct. 2, 2023].
  49. Smutka L., Burianová J. and Belová A. (2012) "The Comparative advantage of Czech Agricultural Trade in relation to the most important trade partners countries in the region of 2008-2011", Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Vol. 60, No. 7, pp. 273-288. ISSN 2464-8310. DOI 10.11118/actaun201260070273.
  50. Smutka, L., Maitah, M. and Svatoš, M. (2018) "Changes in the Czech agrarian foreign trade competitiveness – different groups of partners' specifics", Agricultural Economics – Czech, Vol. 64, No. 9, pp. 399-411. ISSN 1805-9295. DOI 10.17221/399/2016-AGRICECON.
  51. Smutka, L., Svatoš, M., Tomšík, K. and Sergieinko, O. I. (2016) "Foreign trade in agricultural products in the Czech Republic", Agricultural Economics – Czech, Vol. 62, No. 1, pp. 9-25. ISSN 1805-9295. DOI 10.17221/18/2015-AGRICECON.
  52. Sturgeon, T. J. (2013) "Global Value Chains and Economic Globalization-Towards a New Measurement Framework", Frankfurt am Main: European Central Bank. [Online]. Available: https://ec.europa.eu/eurostat/documents/7828051/8076042/Sturgeon-report-Eurostat.pdf [Accessed: Oct. 2, 2023].
  53. TiVA (2023) "Trade in Value Added", [Online]. Available: https://www.oecd.org/sti/ind/measuring-trade-in-value-added.htm [Accessed: July 20, 2023].
  54. Trienekens, J. (2011) "Agricultural Value Chains in Developing Countries: A Framework for Analysis", International Food and Agribusiness Management Review, Vol. 14, pp. 51-82. ISSN 1559-2448. DOI 10.22004/ag.econ.103987.
  55. Vondráček, M., Smutka, L., Vacek, T., Pulkrábek, J., Timoshenkova, I. and Maitah, K. (2022) "Distribution of Comparative Advantages on Sugar Market in EU Countries and Specific Position of Czech Exports", Listy Cukrovarnické a Reparské, Vol. 138, No. 11, pp. 374-384. ISSN 1805-9708.
  56. Vollrath, T. (1991) "A Theoretical Evaluation of Alternative Trade Intensity Measures of Revealed Comparative Advantage", Review of World Economics, Vol. 127, No. 2, pp. 263-279. ISSN 1610-2886. DOI 10.1007/BF02707986.
  57. Xing, Y., Gentile, E. and Dollar, D. (2022) "Global value chain development report 2021: Beyond production", Manila, Philippines: Asian Development Bank. [Online]. Available: https://www.wto.org/english/res_e/booksp_e/00_gvc_dev_report_2021_e.pdf [Accessed: Oct. 2, 2023].
  58. Yu, R., Cai, J. and Leung, P. (2009) "The Normalized Revealed Comparative Advantage Index", The Annals of Regional Science, Vol. 43, No. 1, pp. 267-282. ISSN 1432-0592. DOI 10.1007/s00168-008-0213-3.

Full paper

  Full paper (.pdf, 724.72 KB).