Competitiveness analysis through RCA indices (revealed comparative advantages)

The thesis focuses on the concept of competitiveness, comparative advantage and intra-industry trade. Comparative advantages of the Czech Republic, Germany, Sweden, South Korea and Australia are measured by using various revealed comparative advantage (RCA) indices. Based on the data of selected countries between the years 2001 and 2017, the results of the analysis were able to show that sectors of significant comparative advantage possessed acknowledged brands at the corporate level in most cases. The sectors were classified using the harmonised commodity description and coding system. The very exception was Australia, which in most cases did not have recognized brands in sectors with substantial comparative advantage since significant contributions to Australia’s GDP are made by their service sector. The comparative advantage analysis was hinged on the observation of the balance of trade for goods which excluded the flow of exports and imports of services. Moreover, the intra-industry analysis clarified some key determinants which RCA indices were not capable of portraying: some sectors of great comparative advantage had the aspect of low-quality vertical intra-industry trade, i.e. the industry produced low value-added outputs. Such trade has paltry contributions to the growth of domestic wealth. Given that the aim of national competitiveness is to raise or maintain high living standards and considering that one of its key factors is to attain high domestic income, having great comparative advantage does not invariably mean that the industry is regarded competitive.