Which revealed comparative advantage index to choose? Theoretical and empirical considerations

Abstract

This article proposes guidelines for choosing an index of revealed comparative advantages (RCA) to analyse a given configuration of countries, products and periods. Following a systematic review of the main theoretical strengths and weaknesses inherent in RCA indices, a standardized method is designed to gauge the quality of their empirical measurement. This method is illustrated for Colombia and the Northern Triangle. The guidelines formalize a number of theoretical and empirical trade-offs that need to be weighed to provide a better basis for choosing an RCA index.