Measuring the Trade Performance of States

Abstract

The aim of this article is to study indicators that measure the trade performance of states. The study of these indicators will reveal the productive model of each national economy in relation to comparative advantages in high, medium–high, medium–low and low technology sectors, as well as the competitiveness of the countries’ exports at the international level. In order to study these objectives, we adopt the methodology of the theory of comparative advantage. The theory of comparative advantage is at the core of the Neoclassical theory of trade. David Ricardo was the first to formulate the concept of comparative advantage in the nineteenth century, in order to explain which the benefits are for all countries that participate in international trade (O’Brien and Williams, 2016, p. 104). Measuring the comparative advantages of national economies is a difficult task. Economists have developed specific criteria for measuring comparative advantage. The most widely known and most traditional measurement criterion is the Revealed Comparative Advantage (RCA) index, formulated by Balassa in 1965 (World Trade Organization. (2012). A Practical Guide to Trade Policy Analysis, WTO., p 26). However, this article also discusses a number of indicators developed by the World Bank for the study of trade relations. The analysis of the article focuses on the countries under review, i.e. Germany, Greece, the US, and China, for the last decade (2011–2021).