The Complexity of Agricultural Competitiveness: Going Beyond the Balassa Index
Nicolae Istudor, Marius Constantin, Raluca Ignat, Bogdan-Cristian Chiripuci, Irina-Elena Petrescu
revealed comparative advantage, foreign trade, food security, raw agricultural products, processed foods, added value
Agricultural competitiveness is a complex, multifaceted concept that goes beyond outright economic results. Balassa, in 1965, operationalized one of the most common methods of measuring competitiveness – the revealed comparative advantage (RCA) or the “Balassa Index.” However, scholars and practitioners argue for more holistic competitiveness approaches. Thus, this research aimed to add layers to the concept of agricultural competitiveness through a value chain analysis based on national production, trade balance results, and the Balassa Index for the EU-27 countries. Data were extracted from INTRACEN and FAOSTAT databases. Statistical analyses were carried out for two types of products – cereals (raw agricultural products) and cereal preparations (processed foods) – to explain why the Balassa Index alone is not enough to capture, characterize, and ultimately define agricultural competitiveness. Findings confirm comparative advantage trade-offs between raw agricultural products and processed foods, based on a resource management paradox, demonstrated by (a) countries with a trade balance surplus in cereals and low RCA values for cereal preparations and (b) countries with a trade balance deficit in cereals and high RCA values for cereal preparations. The novelty factor of this paper resides in providing a competitiveness assessment framework based on an agri-food value chain analysis that proved that the resource management systems in countries with factor endowments were poor. Tracking value chain flows at all its link levels is essential for better measurement of a sector’s degree of competitiveness when compared with other regions. Competitiveness indices must be further developed in this direction. Research findings can support decision-makers in making better strategies for agricultural resource management through efficient food processing and international trading activities.
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Istudor, N., Constantin, M., Ignat, R., Chiripuci, B.-C., & Petrescu, I.-E. (2022). The Complexity of
Agricultural Competitiveness: Going Beyond the Balassa Index. Journal of Competitiveness, 14(4), 61–77. https://doi.org/10.7441/joc.2022.04.04