Methodology: Measuring the Competitiveness of Tunisian Agri-Food Products
Several definitions have been used in previous literature to define competitiveness. It changes depending on the purpose of the analysis and the studied product. Indeed, various approaches have been used to analyze the competitiveness of international agri-food trade. In this chapter, the Revealed Comparative Advantage (RCA) index is used to assess the competitiveness of Tunisian products with respect to its partners (the EU and the Arab Maghreb Union, UMA). Data on Tunisian exports by HS chapter are obtained from the National Institute of statistics (INS) and include exports by commodity from chapters HS01 to HS23 and partner country from 2007 to 2012. Values are presented in Tunisian dinars.
Balassa Revealed Comparative Advantage (RCA) index
This index was used for the first time by Liesner (1958) and improved by Balassa in 1965. It came to be known as the “Balassa Index” and it measures normalized export shares of a country, compared to exports of the same industry in a group of reference countries.
Balassa (1965) defined the RCA index as the ratio between exports of certain products (HS2 chapter) of a country (in this study Tunisia) and total exports of this country to the rest of the world (or the geographical reference area; in this study we consider the EU and UMA as a geographical reference area), and world exports (or the geographical reference area) of the same product to the total world exports (or the geographical reference area) (Vollrath 1991; Bojnec 2001).
RCA can take positive or negative values. Positive values of RCA are interpreted as meaning that the country has comparative advantage. The Balassa RCA is defined as
X represents exports from Tunisia of HS2 sector (i);
Mt represents imports of HS2 sector (i)
While the index is not free of shortcomings (see Cai and Leung 2007), it is still widely used for a first approximation to the measure of competitiveness. As an instance, at the end of the previous century, Chebbi and Gil (1999) presented a general diagnostic of Tunisian agri-food sector competitiveness with the EU during the period 1975—1995 using the RCA index. An overview by groups of products revealed that products of animal origin present a slightly higher competitive advantage compared to other subsectors thanks to the high competitiveness of HS2 03 (fish and crustaceans) and the strong Tunisian marketing strategy to promote fishery exports. In addition, the authors found that the competiveness of the vegetable subsector deteriorated over the period of study. They pointed out to the irregularity and low production level, of which a major proportion is absorbed by domestic demand (Arfa 1995). On the other hand, they showed that the competiveness of dates and olive oil was improved due to their competitive prices and improved quality compared to those of their direct competitors.