Trade glossary · measurement

Revealed comparative advantage (RCA)

Also known as: RCA, Balassa index

An index of how specialized a country is in exporting a particular product, relative to that product's share of world trade. RCA > 1 means above-average specialization.

The Balassa RCA index = (country's share of product X in its exports) ÷ (product X's share of world exports). RCA above 1 indicates the country exports more of X than its overall trade share would predict — i.e., it has revealed comparative advantage. RCA is used to identify export specialization patterns and to forecast which products a country could plausibly enter next.

Examples

  • Bangladesh has high RCA in apparel (HS 61, 62) — it exports far more apparel than its overall trade share would predict.
  • Germany has high RCA in vehicles (HS 87) and machinery (HS 84).
  • Saudi Arabia has near-monopoly RCA in crude petroleum (HS 270900).

Related terms

Economic Complexity Index (ECI)
A ranking of countries by the diversity and sophistication of their export portfolios. Developed by Hidalgo and Hausmann at Harvard's Growth Lab.
Product space
A network of products where proximity reflects how often countries export them together. Used to predict which new products a country could plausibly start exporting.