Assessing comparative advantages of agricultural export commodities in Vietnam

Abstract

Measuring agricultural comparative advantage is an important economic issue in both theoretical and empirical studies because it allows for tracking effectiveness and leads to more informed decision making to design agricultural value chain, development policy, and agribusiness strategy. This paper aims to (i) assess the comparative advantage of agricultural commodities in Vietnam, (ii) analyse the dynamics of the indicators over the period 1997-2014, (iii) and finally test the consistencies between the used indices. This study employs (i) trade performance frameworks such as NEI, RCA, RTA, LFI, and NRCA to measure the comparative advantage, (ii) OLS regression and transition matrices to analyse the dynamics of the indicators, (iii) statistic tools based on cardinal, ordinal and dichotomous measures to test the consistencies. The results show that: Vietnam is strongly competitive in crop sectors and fishery sectors whilst it is not competitive in livestock sectors and processed food sectors. The high probabilities of comparative advantage indicators remain in their initial classes, in which disadvantageous and strongly advantageous classes are most stable. The finding confirms that the indices are strongly consistent and useful to assess whether a country is competitive in a commodity whilst they are weakly consistent to evaluate the degree of competitiveness.