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REVEALED COMPARATIVE ADVANTAGE OF INDIAN SOYBEAN MEAL EXPORTS

By: Nishant Joshi Dr.R.K.Sharma Amrita Thakre CA.Sachidanand Pachori

. Conversely England benefits from this trade because its cost for producing cloth has not changed but it can now get wine at a lower price.In Portugal it is possible to produce both wine and cloth with less labor than it would take to produce the same quantities in England. Therefore while it is cheaper to produce cloth in Portugal than England. and trade that for English cloth. The conclusion drawn is that each country can gain by specializing in the good where it has comparative advantage.Just a Recall at what is comparative Advantage y In economics. closer to the cost of cloth. or a country) to produce a particular good or service at a lower opportunity cost than another party. and trading that good for the other. In Portugal both are easy to produce. and only moderately difficult to produce cloth. In England it is very hard to produce wine. it is cheaper still for Portugal to produce excess wine. the law of comparative advantage refers to the ability of a party (an individual. However the relative costs of producing those two goods are different in the two countries. It is the ability to produce a product with the highest relative efficiency given all the other products that could be produced y The concept is attributed to David Ricardo who explained it in his 1817 book On the Principles of Political Economy and Taxation in an example involving England and Portugal. a firm.

` Ha 1: India has comparative advantage of exports compared to USA. . ` Ha 2: India has comparative advantage of exports compared to Brazil.Objective and Hypothesis ` The objective of the research paper is to study the Revealed Comparative Advantage of Soymeal exports from India visa vis USA and Brazil ` Hypothesis: ` Ho 1: India has no comparative advantage of exports compared to USA. ` ` Ho 2 India has no comparative advantage of exports compared to Brazil.

Research Methodology ` To assess competitiveness of a country the Revealed Comparative Advantage Index (RCAI) proposed by BALASSA (1965) is useful. ` ` ` ` ` ` ` ` ` ` ` ` ` . The RCAI can be estimated by the equation: RCAij = (Xij/Xwj)/(Xi/Xw) Being: Xij = ith country s export of commodity j Xwj = World exports of commodity j Xi = Total exports of country i Xw = Total world exports. a country would have a revealed comparative advantage and be competitive if the RCAI is higher than 1. and RCAI = 1 India has neither revealed comparative advantage. We have not taken china as it is has shown tendency of becoming net importer of soymeal many times in the taken time span. If: RCAI < 1 India does not have a revealed comparative advantage. According to RCAI.0. RCAI > 1 India has a revealed comparative advantage. nor disadvantage. The RCAI shows if a country is competitive in producing and exporting a specific good.

Data y Table 1 y Export of soybean Meal from select countries between 2004 to 2009 in Million US$ .

Table 2: Total Exports from select countries between 2004 to 2009 in Million US$ .

Table 3: Total world exports of soybean meal in Million US$ .

Table 4: Total world exports in Million US$ .

Results .

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. Another interpretation of the result could be that the demand of our product is present in the world market. Research in the area of nongenetically modified soybean crop should be increased in the direction of development of special quality seeds that have higher productivity. Soybean is a rain dependent crop hence measures for water storage and better irrigation techniques should be promoted. ` Brazil today has both comparative advantage and market share because of the simple fact that it¶s second to USA and Argentina in production of soybean. It can be suggested that government should take serious steps to promote more farm production of soybean. The government should formulate special strategies to take full advantage of this demand.73 million out of which we are able to only tap roughly 9% even though we are having comparative advantage over the market leader.Conclusion ` The empirical analysis is evidence of the fact that India is at a comparable advantage over USA in the exports of soybean meal. The reason for this could be the lower farm production of soybean as compared to USA. In 2008 world market for soybean meal exports were US$ 18728. If our production and market presence increases we shall be able to match or even push Brazil a step below us. It seems that the current schemes are not effective. Still USA exports more as compared to India.

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