The analysis of the impact of a FTA in Southern Africa using the framework
presented in Section II is conducted by following three steps. In the first step,
we estimate indices of Revealed Comparative Advantage (RCA) and Revealed
Comparative Disadvantage (RCD) for each country and determine the set of industries
showing complementarity. The RCA measure proposed by Balassa (1965) implies
that a country’s pattern of comparative advantage could be observed from post-trade
data, assuming that actual trade reflects relative costs as well as differences in nonprice
factors, and is grounded in conventional trade theory. As the focus is on trade
between SADC countries, the reference used to determine comparative advantage and
disadvantage is the group of SADC countries, so our measure refers to advantages and
disadvantages relative to the region.