Comparative and Competitive Advantages in Coffee Exports: Examining the Role of FDI and Exchange Rates

Akbar Mandela A. Yunus (), Munawar Ismail, Putu Mahardika Adi Saputra and Setyo Tri Wahyudi
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Akbar Mandela A. Yunus: Hasanuddin University
Munawar Ismail: Universitas Brawijaya
Putu Mahardika Adi Saputra: Universitas Brawijaya
Setyo Tri Wahyudi: Universitas Brawijaya

A chapter in Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), 2026, pp 594-605 from Springer

Abstract: Abstract This study examines the effects of foreign direct investment (FDI) inflows and real exchange rates on the quantity of coffee exports, while explicitly accounting for the roles of comparative and competitive advantages. Using annual data for Brazil, Vietnam, Colombia, Indonesia and India over the period 2009–2019, we estimate a panel path analysis model within a structural equation modelling framework. Comparative advantage is measured using the normalised revealed comparative advantage index, and competitive advantage is proxied by differences in export price indices. The empirical results show that FDI inflows have a positive and statistically significant direct effect on coffee export quantity, confirming their role in strengthening export capacity through technology, capital and market access. However, FDI exerts a significant negative indirect effect on exports through comparative advantage, while the indirect effect through competitive advantage is not significant. The real exchange rate has a negative and significant direct impact on coffee exports, indicating that exchange rate depreciation is associated with lower export volumes in the coffee sector, whereas its indirect effects through comparative and competitive advantages are not significant. Overall, the findings highlight the importance of jointly considering international capital flows, exchange rate movements and structural trade advantages when formulating policies to enhance coffee export performance in major producing countries.

Keywords: coffee exports; comparative advantage; competitive advantage; foreign direct investment (FDI); real exchange rate (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-709-5_41

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