CARIFORUM and UK EPA Study

partners to determine their level of competitiveness. The standard RCA methodology 49 is expressed as:

The available empirical literature 50 suggests, however, that the standard methodology has a tendency to skew the outcome of the RCA analysis, as it incorporates other “world” or unobserved external factors that cannot be directly accounted for or explained by the results obtained, and thus only provides a theoretical framework for analysis rather than one that is practical. This is due to the fact that a given country’s competitiveness is being evaluated against its relative competitiveness with exporters throughout the entire world, including those potential trade partners with which it conducts no trade, despite the goal being to determine whether it is competitive vis-à-vis those countries within a given regional grouping against whom it is in fact competing in relation to the conduct of trade with a preferred trading partner. The regional RCA, on the other hand, expresses each country’s share of exports of a given service to a preferred trading partner in its total exports of services to that partner, against the overall share of all directly competing countries’ exports of that given product in the region’s gross exports of

49 Wosiek, Roman, and Ana Visvizi. 2021. The VWRCA Index: Measuring a Country’s Comparative Advantage and Specialization in Services. The Case of Poland. Economies 9: 48. https//doi.org/10.3390/economies9020048.

50 Wosiek, Roman et al (2021).

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