Revealed Comparative Advantage: An Analysis of Exports of Rwanda

Abstract

The paper undertakes a detailed analysis of Revealed Comparative Advantage of the exports of Rwanda. The objective of the research is to understand the Rwanda’s pattern of trade; to identify a change in this pattern over the period of study; in support of the policies and strategies, to identify areas for improvement. Rwanda is primarily an agrarian economy where people have been dependent on country’s natural endowments for subsistence. A large population is still employed in the agricultural sector. The revealed comparative advantage lies in primary products. There has been little change in the composition of exports. The Standard Balassa Revealed Comparative Advantage Index (BRCAI) has been used for analysis. Rwanda RCAI in its otherwise primary exports product lines has been declining owing to increasing pressure from the supply side. Intense competition from other exporting economies has made Rwandan exports uncompetitive. The country needs to invest in research and development, technological advancements and Education in order to boost output and exports. The government needs to push reforms in industrial sector and open up the economy for private players in more industries, especially agro-processing and leather-goods.

Keywords: Revealed Comparative Advantage, Balassa Index, Rwanda, Namibia, Export Competitiveness

JEL Classification: F00, F13, F14, F62, P50