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Revealed comparative advantage and competitiveness in Hungarian agri-food sectors

Lookup NU author(s): Imre Ferto, Dr Lionel Hubbard


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Hungary's exports of agricultural commodities and food, although a declining share of total trade, make a significant contribution to reducing a negative overall trade balance. In 1998 the agri-food trade balance was US$1.5 billion; the overall trade balance was US$-2.7 billion. Furthermore, Hungary was the only Central and Eastern European country (CEEC) to maintain a positive agricultural trade balance with the EU throughout the 1990s. In this paper we focus on Hungary's trade in agricultural and food products and examine its relative competitiveness vis-à-vis the EU. Our analysis is based on revealed comparative advantage (RCA). This is a common approach to analysing trade data. However, since first proposed by Balassa (1965), the definition of RCA has been revised and modified such that a plethora of measures now exist. Some specifications aim to measure RCA at the global level (e.g. Vollrath, 1991), others at a regional or sub-global level (as in Balassa's original specification), whilst some restrict the analysis to bilateral trade between just two countries or trading partners (e.g. Dimelis and Gatsios, 1995; and Gual and Martin, 1995). Given that we are interested in the competitiveness of Hungary within a European context, we have chosen to calculate RCAs with the EU as the comparator, but using total rather than bilateral trade flows. The following section briefly reviews the literature on the competitiveness of Hungarian agriculture and food production during the 1990s. Section 3 outlines our approaches to measuring RCA indices and the potential importance of government interventions. Results for Hungary are reported in Section 4 and the stability of the RCA indices are discussed in Section 5. A summary and our conclusions are presented in Section 6.

Publication metadata

Author(s): Ferto I, Hubbard LJ

Publication type: Article

Publication status: Published

Journal: World Economy

Year: 2003

Volume: 26

Issue: 2

Pages: 247-259

Print publication date: 01/02/2003

ISSN (print): 0378-5920

ISSN (electronic): 1467-9701

Publisher: Wiley-Blackwell Publishing


DOI: 10.1111/1467-9701.00520


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