Net Comparative Advantage Index: Overcoming the Drawbacks of the Existing Indices

Andrey Gnidchenko and Vladimir Salnikov
Additional contact information
Vladimir Salnikov: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: In this paper, we examine a number of indices used for measuring comparative advantages of a country in international trade for a good and propose the new net comparative advantage index that has several strong features. First, it reflects net trade, and that’s why it is more theoretically grounded than indices calculated only from export data. Second, it is consistent with Kunimoto (1977) theoretical framework that is highly appreciated among trade economists. Third, it is not totally focused on a single commodity (that is, it takes world trade structure into consideration), unlike net export index. Fourth, it accounts for economic openness, using GDP as a scale variable. Fifth, it is hardly exposed to structural distortions. Finally, its sign is consistent with the sign of the net trade. We compare the new index with CEPII theoretically grounded econometric indicator and show that the proposed index has better empirical characteristics and is much easier to calculate and interpret.

Keywords: international trade; comparative advantages; goods; indices; net trade (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published in WP BRP Series: Economics / EC, December 2015, pages 1-39

Downloads: (external link)
http://www.hse.ru/data/2015/12/29/1136287015/119EC2015.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:119/ec/2015

Access Statistics for this paper

More papers in HSE Working papers from National Research University Higher School of Economics
Bibliographic data for series maintained by Shamil Abdulaev () and Shamil Abdulaev ().