Competitiveness of major rice exporting nations.

AuthorDavar, S.C.
PositionBy Contribution - Abstract


Being a staple food, rice is traded all over the world. Thailand (9.047 million tons), Vietnam 6.734 (million tons), Pakistan (4.0 million tons), USA (3.514 million tons), India (1.9 million tons), Italy (0.781 million tons), Egypt (0.705 million tons), China (0.650 million tons) and Myanmar (0.445 million tons) are the top exporters of rice in 2009-10 (FAO, 2010). China (136.6 million tons), India (81.1 million tons), Indonesia (36.4 million tons), Bangladesh (31.0 million tons), Vietnam (25 million tons), Thailand (20.3 million tons), Myanmar (10.6 million tons), Philippines (9.8 million tons) Brazil (7.7 million tons), Japan (7.7 million tons), USA (7.1 million tons) and Pakistan (6.8 million tons) are the top producers of rice. The stock after domestic consumption, implications of government policies (Peter, 1996) and comparative advantage (Ricardo, 1817) are the basic factors that govern international trade. There are three interrelated factors here (Peter, 1996) i.e. competitive potential (the ability of efficient use of input capacity), competitive performance (the ability to produce a profit oriented product) and the management process (the ability of management to take competitive decisions).

There should be competitive ability, an ability in supplying (potential of export) of a product or service on a sustainable (long-term) and viable (profitable) basis. Porter (2008) believed that competitive success is underpinned by the possession of a specific advantage over the rivals. But after the emergence of WTO, the world trade has been facing stiff competition due to the liberalized policies of the governments and openness of the world market. Increasing demand, new technologies, liberalization, privatization and globalization have enhanced the business opportunities, but these also increase competition from the new entrants.

Objectives of the Study

* To examine the competitiveness of major rice exporting countries with the help of Blassa's Revealed Comparative Advantage Index and White's Revealed Competitive Advantage Index.

* To analyze the impact of WTO on rice export competitiveness of China, India, Pakistan, Thailand, USA and Vietnam.

* To rank rice exporting countries according to their competitiveness positions


Ricardo (1817) pointed out that international trade takes place because of efficiency to produce an exported product. A country will export products that use their abundant and cheap factor(s) of production and import product (s) that use its scarce factor(s). Heckscher (1919) and later Ohlin (1933) explained the comparative advantage as the ability to produce at lower marginal or opportunity cost. Ricardian comparative advantage arises due to technology differences across the countries while Heckscher-Ohlin argued that when technology remains the same comparative advantage arises as a result of the cost differences. Both the theories are based on a 2x2x2 model (2 countries, 2 products and 2 factors of production). Ricardian theory assumed that the comparative advantage takes place due to differences in technology and labor cost differences whereas H-O theory claimed the capital and labor costs leading to comparative advantage.

Porter (1985) has developed a model of competition strategies to create high-quality goods to sell at high price in the market. A country is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any rival. Competitive advantage is the ability to stay ahead of present or potential competition, thus superior performance reached through competitive advantage will ensure market leadership. Competitive advantage grows fundamentally from the value a country is able to create. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset higher prices. Competitive advantage encapsulates the comparative advantage because comparative advantage arises due to cost and competitive advantage arises due to lower price and equal profit. He advocated three strategies for competitive advantage i.e. cost leadership, differentiation and focus.

Revealed Comparative Advantage Index of Blassa (1965) and Revealed Competitive Advantage Index of White (1987) and Vollrath (1987) explained elaborately the concept of competitiveness. The Revealed Comparative Advantage Index was put forward by Blassa (1965 & 1977) because of the view that cost comparisons by Hecksher-Ohlin (neo-classical) theory and Ricardian (classical) theory were an inadequate surrogate for comparative advantage index to measure the competitiveness. Blassa (1965) mentioned that the use of export and import ratio would account for the imported immediate goods used for production of export commodity and thus reveal the real comparative advantage of a nation. Later, Vollrath (1987) and White (1987) advocated that competitive advantage is more appropriate to measure the export competitiveness. They argued that revealed comparative advantage use the export data only. Since import also is a part of international trade they used the import data to measure the revealed competitive advantage as an extension of Revealed Comparative Advantage.

Past Studies

The above indices have been used for the analysis of competitiveness in several past studies. Chen (1995) has applied the Revealed Comparative Advantage and Revealed Competitive Advantage to test the competitiveness among major rice exporting countries. Ferto (2002) investigated the competitiveness of Hungarian agriculture in relation to that of the EU employing Revealed Comparative Advantage Index for the period of 1992 to 1998. Utkulu et al. (2004) analyzed the competitiveness and the pattern of trade flows/trade specialization from Turkey to the EU by the use of Blassa's Revealed Comparative Advantage Index only. Mohammad (2004) analyzed the export competitiveness of non-agricultural production sectors by using the Revealed Comparative and Revealed Competitive Advantage Indices. Batra (2005) used the Revealed Comparative Advantage to analyze the competitiveness of India and China in agricultural trade. Khorchurklang (2005) had examined the export competitiveness in dairy products of Australia with other major competing countries by the use of Blassa's Revealed Comparative Advantage and Vollrath's Revealed Competitive Advantage indices. Bhat et al. (2006) analyzed a report of Institute for Studies in Industrial Development, in which, he applied Blassa's Comparative Advantage Index for the measurement of competitiveness of the external sector (export and import) of China and India. He pointed out that India has advantage over its competitors in primary products, natural resource based or low technology manufacturing products in Chinese market. Siggel (2007) has used the Ricardian principles of comparative advantage in the context of policy reforms in India, Mali, Kenya and Uganda. Shinoj and Mathure (2008) ascertained the changes in comparative advantage status of India's major agricultural export vis-a-vis other Asian countries since 1991 by using Revealed Comparative Advantage Index. Burange & Chadha (2008) assessed India's Revealed Comparative Advantage (RCA) in merchandise trade and evaluated the structure of comparative advantage in India and the change in the scene over the 10-year period from 1996 to 2005. Russu (2011) analyzed the competitiveness between the manufacturing industries of European Union and Romania, in the globalization context with the aim to highlight the strength and weakness of latter and to offer view on industrial sectors' competitiveness with the use of Revealed Comparative and Revealed Competitive Advantage Indices. Bhattacharya (2011) analyzed the competitiveness of Indian horticulture sector with its rivals by using Revealed Comparative and Revealed Competitive Advantage Indices. Taneja (2011) analyzed specialization with comparative advantage in pruning sensitive list under SAFTA.

(i) Blassa's Revealed Comparative Advantage (BRCA) Index is a ratio of a country's export share of a commodity in world's export of that commodity with the country's total export share in total world export. If the value of index is greater than 1, than the country has comparative advantage. It is an indicator of competitiveness (Siggel, 2007).

S. C. Davar & Bhupinder Singh ( are from Department of Commerce, Kurukshetra University, Kurukshetra.

[CA.sub.i] = ([E.sub.ij]/ [E.sub.nj])/ ([]/ [E.sub.nt])

E= Export, i= country, j= commodity (rice), t= set of commodity (total), n= set of countries (total world). The Index has been applied into two categories in the present study i.e. agriculture and merchandize. Rice export is a part of agricultural export and also a part of total merchandize export.

(a) Revealed Comparative Advantage in respect of Agricultural Trade (CAA)

[CAA.sub.i] = ([E.sub.ij]/ [E.sub.nj])/ ([E.sub.iA]/ [E.sub.nA])


Share of Country's commodity export(ij) in world's export of that commodity (nj)/ =Share of Country's Agricultural export (iA) in world's total Agricultural export (nj)

(b) Revealed Comparative Advantage in respect of Total Merchandize Trade (CAM):

[CAM.sub.i] = ([E.sub.ij]/ [E.sub.nj])/ ([E.sub.iM]/ [E.sub.nM])


Share of Country's commodity export(ij) in world's export of that commodity (nj)

Share of Country's Merchandise export (iM) in world's total Merchandise export (nj)

(ii) White's Revealed Competitive Advantage Index (WRCA) is an extensive form of BRCA. Import data of specific commodity of a country has been taken into account for the calculation of WRCA. It is also a net comparative advantage (export share import share). If the value of

WRCA is positive (>0), it has competitive advantage.


E= Export, I= Import, i=...

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