CARIFORUM and UK EPA Study

Though the RCA developed here is not meant to give an indication of a dynamic comparative advantage, observations of this ratio over time can give an idea of how the countries’ relative strengths have shifted over time, though more detailed analysis will be required to determine the reasons behind these shifts in trade flows, which is beyond the scope of this Study. The RCA, therefore, “reveals” potential opportunities for CF exports into the UK market. When this is compared with UK Imports (used as an estimate of import demand, based on the idea that this captures price and income factors that drive import demand) we can observe, all things being equal, where the potential opportunities lie. It should be noted that considerations such as subsidies, regulatory and other factors, price and competitiveness, consumer tastes and preferences and branding, may all have implications for actual demand by UK consumers, as well as an increase in import penetration (measured as the import of that product from CF country i as a percentage of total UK imports). A detailed look at the RCA measures over the PoA, indicates that there have been some changes over time. With some items previously not having a revealed comparative advantage, now doing so during the most recent period. 35 This historical analysis is only useful as it confirms that shifts can in fact take place over time. However, given the use of trade data to “reveal” the comparative advantage, this does not indicate that there has been any change in factor endowments or the structure of trade. As noted by Cadot, Carrère, & Strauss-Kahn ( 2011) changes in diversification, even over time, may indicate attempts by the private sector, with imperfect information, to take advantage of perceived opportunities. However, as imitation takes place and this becomes less competitive, this effort is not sustained, and thus does not translate into a lasting trade pattern. 6.1 Country Data

35 See Appendix V for detailed country level estimates.

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