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Revealed Comparative Advantage (RCA) in Croatia

Integration processes on the European continent, aiming to link economically, changed trade trends fundamentally, primarily in the CEEC countries. The Republic of Croatia attained the autonomy in creating own economic and foreign trade policy through its independence. However, aspirations towards the association to the European Union brought the need of accepting the global foreign trade rules, set by the WTO. Adjustments to the WTO rules triggered big changes in all segments of the economy, especially in the sector of export. One of the measuring methods is the calculation of technological competitiveness through comparative advantage indicators by technological classes (RCA). They are calculated with the equation introduced by Balassa (1965) and with the usage of Wolfmayr-Schnitzer (1998) method of technological classification. The later is used in the combination with earlier methods set by Legler (1982), Schulmeister (1990), and Schulmeister-Boesch (1987). Mentioned quantifies the changes in specialization of an observed country towards the rest of the world. The newest approach contemplates the comparison by chosen group of countries, for instance, the OECD or the comparison with aggregate indicators in the observed country. The RCA method will help identify sectors in which the Republic of Croatia retains comparative advantages towards other economies.

Republic of Croatia; economic and foreign trade policy; European Union; WTO; comparative advantage indicators; RCA method

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