Revealed Comparative Advantage and Competitiveness in Hungarian Agri–Food Sectors

Abstract

We examine the competitiveness of Hungarian agriculture and food processing, in relation to that of the EU, based on four indices of revealed comparative advantage, using highly disaggregate data for the period 1992 to 1998. Consistency tests suggest that the indices are less satisfactory as cardinal measures, but are useful in identifying the demarcation between comparative advantage and comparative disadvantage. Hungary is shown to have a comparative advantage in a range of agri-food products, including animals and meat. This complements the findings of those studies that have used price and cost based approaches in identifying competitiveness in cereals and crops. Results indicate that the RCA indices, when interpreted as a binary measure, have remained surprisingly stable during the period of transition, although there is evidence of a weakening in the level of comparative advantage as revealed in the Balassa index.