Changes in Revealed Comparative Advantage in Machinery and Equipment: Evidence for Emerging Markets

Abstract

The paper computes Balassa’s index of revealed comparative advantage for machinery and equipment (a rough proxy for high-tech goods) for a number of emerging areas (East Asia, South-East Asia, South Asia, Eastern Europe, Latin America, Africa, and the Middle East) and for selected individual countries over some 50 years, from the early 1970s to the early 2020s. The focus is on why some economies were successful in promoting high-tech sectors. As could be expected, experience differs hugely. In some countries, interventionist trade or industrial policies were crucial in fostering comparative advantage. In others, however, the role of policies appears to have been minor and successes were achieved thanks to the free play of market forces (including an important contribution, at least in some countries, coming from foreign direct investment).