in either a designated market or in a region or for the whole world. The
RCA is measured using post-trade data.
The index of revealed comparative advantage (RCAij) has a relatively simple
interpretation. If it takes a value greater than unity, the country has a revealed
comparative advantage in that product.
The advantage of using the comparative advantage index is that it considers the
intrinsic advantage of a particular export commodity and is consistent with changes in an
economy’s relative factor endowment and productivity. The disadvantage, however, is
6
that it cannot distinguish improvements in factor endowments and pursuit of appropriate
trade policies by a country