Revealed Comparative Advantage; Consistency and Stability Tests (Evidences of the Competitiveness of Agriculture, Industry and Services Sectors in the Iranian Economy)

Abstract

In the present study, the competitiveness of Iran's agricultural, industrial and in global markets services sectors has been investigated and analyzed. This measurement was taken by calculating four indicators of relative comparative advantage (RCA) at the level of two- and four-digit codes of the International Industrial Standard Classification System for Economic Activities (ISIC) and using the data of Iran-world input-output tables during the period 1996-1995. The results show that out of 3 main subgroups of agriculture, only subdivisions of agricultural products, horticulture, livestock and poultry and hunting and other related activities, and out of 19 subdivisions of industry, only subdivisions of mineral extraction and other related materials, have RCA in all studied years. Other subsections have fluctuations in the presence or absence of comparative advantage, and some have a distinct RCA pattern. This situation has existed in 10 service sub-sectors of the country, but in general, the relative export advantage for service sub-sectors has not been identified in the whole period. In addition, the results of RCA index compatibility tests by performing 3 Cardinal, Ordinal and Dichotomous Measures show that the results of Ordinal tests are more satisfactory than the results of Dichotomous and Cardinal tests and therefore, the present study provides an Ordinal interpretation of RCA indicators in the formation of economic policies. Finally, the results of stability tests show that the indicators of comparative export advantage did not have a stable trend during the period.

Keywords

• revealed comparative advantage
• consistency test
• stability test
• iranian economy