Revealed Comparative Advantage (RCA)

RCA or Revealed Comparative Advantage have
been used to assess a country’s export potential. This method indicates a trade
potential of a product compare with the total world trade. This method can also
provide useful information about potential trade prospects with new partners.

RCAij = (xij/Xit) / (xwj/Xwt)

xij and xwj = values of country i’s exports of product j and world exports of product j

Xit and Xwt = country’s total exports and world total exports

for result if :

RCAij > 1 Country i has a revealed advantage in product j.

RCAij < 1 Country i has a revealed disadvantage in productj.