D ETERMINANTS OF COMPARATIVE ADVANTAGES : THE CASE OF THE E UROPEAN CHEESE TRADE MAKE conference Jeremiás Balogh 1 – Attila Jámbor 2 1 PhD Student, Corvinus University of Budapest 2 Assistant Professor, Corvinus University of Budapest

O UTLINE Motivation Theoretical framework Methodology Evaluating EU-27 cheese export competitiveness Data Hypothesis Results Conclusion and discussion

M OTIVATION Competitiveness literature Most studies have focused on industrial products Agri-food sectors usually neglected in empirical works The determinants of revealed comparative advantages are rarely investigated Currently missing studies from literature Revealed comparative advantages of European cheese trade Long time period analysis( ) Panel data econometrics Effect of PDO, EU accession

E MPIRICAL LITERATURE ON COMPETITIVENESS Ferto and Hubbard (2003) – Hungarian agri-food sectors Qineti et al. (2009) - Slovak and EU agri-food trade with Russia and Ukraine Bojnec and Ferto (2009) - Central European and Balkan countries Bojnec and Ferto (2012- impact of EU enlargement on agro ‐ food export performance of NMS Bojnec and Ferto (2014) - agri-food competitiveness of EU-15 Jambor (2013) - Visegrad Countries agri-food trade Torok and Jambor (2013) EU NMS agri-food trade Sahinli (2013) - agriculture sectors of Turkey and the European Union Serin and Civan (2008) - agriculture sectors of Turkey and the European Union Couillard-Turkina (2014) - the effects of free trade agreements on the competitiveness of the dairy sector.

M ETHODOLOGY Balassa index(1965) RCA (B) = (X ij / X it ) / (X nj /X nt ) Dalum et al. (1998) transformed B index, the Revealed Symmetric Comparative Advantage (RSCA) index: RSCA=(B-1)/(B+1) Yu et al. (2009 normalized revealed comparative advantage NRCA : NRCAij=Eij/E － EjEi/EE where X means export, i indicates a given country, j is a given product, t is a group of products and n is a group of countries. E denotes total world trade, E ij describes country i’s actual export of commodity j in the world market, E i is country i’s export of all commodities and Ej denotes export of commodity j by all countries.

D ATA Sample EU-27 internal cheese trade data 52 years Analysed period: Sources World Bank World Integrated Trade Solution (WITS) database FAOSTAT database EUROSTAT COMEX database EUROSTAT DOOR database

EU-27 CHEESE AND CURD TRADE ( ) Partner country export value in million USD (mean) Partner country export quantity in kg (mean) Germany1444Germany Belgium1005Italy Italy864Belgium United Kingdom617United Kingdom Russian Federation483Russian Federation France435France United States311United States Spain305Netherlands Netherlands301Spain Luxembourg208Greece Greece166Czech Republic Source: own composition based on Word Bank WITS database

T HE RCA AND NRCA INDICES FOR CHEESE TRADE BY EU-27 COUNTRIES ( ) RCANRCA CountrymeansdminmaxCountrymeansdminmax Cyprus Netherlands Denmark France Luxembourg Denmark Ireland Ireland Netherlands Cyprus Lithuania Greece France Latvia Latvia Lithuania Greece Luxembourg Austria Austria Estonia Bulgaria Germany Estonia Finland Finland Italy Malta Belgium Poland Source: own composition based on Word Bank WITS database

H YPOTHESIS AND REGRESSION SPECIFICATION Estimated equation: RCA it =α + β 1 UVexp it + β 2 UVimp it + β 3 lnGDP it + β 4 lnGDP/capita it + β 5 lnDairycows it + β 6 TotPopinAgr it + β 7 CheesePDO it + β 8 EUAccession it + u i + ε it H1. Comparative advantages are positively (negatively) associated with export (import) unit values. H2. Factor endowments are positively related to comparative advantages. H3. Comparative advantages will be higher if a product has a PDO. H4. EU accession is positively related to comparative advantages.

R EGRESSION R ESULTS VARIABLESRCARSCANRCA UVexp311.8**38.72**0.023*** (147.0)(19.43)(0.004) UVimp-240.1*-35.99**-0.029*** (128.8)(17.65)(0.004) lnGDP-1.114***-0.517***-0.000*** (0.051)(0.012)(0.000) lnGDPpc1.782***0.644***0.000*** (0.317)(0.016)(0.000) lnDairycows ***0.000*** (0.243)(0.019)(0.000) TotPopinAgr 0.001***0.000***-0.000*** (0.000) CheesePDO0.022***0.020***0.000*** (0.006)(0.001)(0.000) EUAccession ***0.000*** (0.680)(0.038)(0.000) Constant11.05***4.280***0.002*** (1.680)(0.247)(0.000) Observations635 R-squared Number of Panel ID27 Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

C ONCLUSION AND DISCUSSION Results New model for competitiveness of EU cheese trade Evaluation of most competitive cheese exporters Econometric model for export competitiveness Statistically significant evidence for competitiveness and its determinants Role of PDO and EU accession Limitations Macro level Cheese as homogeneous product Unbalanced data set Future research Other factors Product categories Worldwide comparison

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