The effect of internationalisation on the beef and maize sub-sectors: The relevance of revealed comparative advantage measures

According to the RCA and RCA# the beef sub-sector in South Africa has shown a revealed comparative disadvantage for 17 out of the 22 years to 2002, while the maize sub-sector showed a revealed comparative advantage for 18 out of the same 22 years. However, this article argues that these results do not show the real state of competitiveness that exists in these sub-sectors, mainly because RCA measures should not be used to make definitive conclusions whether an industry, sector or sub-sector is competitive, nor whether it uses scare resources efficiently. RCA measures explain in more accurate ways, relative to a simple analysis of export trends, how a country features in the context of world trade. Hence, one possible application of RCA measures is to deduce the impact of changes in trade policies on an industry, sector or sub-sector. Cognisance should also be taken that the RCA measures fail to distinguish between a region's factor endowments. Finally, it appears as if both the beef and maize sub-sectors have adjusted favourably since the implementation of the Marrakech agreement and subsequent deregulation of the domestic market. Favourably in this context means that both sub-sectors appear to have discounted the changing trade and regulatory environments into their respective supply chains. The question of how competitive these sub-sectors are relative to their international counterparts however remains unanswered, and will require a more in-depth analysis of the complete chains for these sub-sectors.

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Journal Article
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Agrekon, Volume 44, Issue 4
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 Record created 2017-04-01, last modified 2017-04-04

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