Competitiveness of ACP Sugar Exporters in the Global Market

ABSTRACT

We employ the normalized revealed comparative advantage index to examine the competitiveness of the African, Caribbean, and Pacific (ACP) countries in the global sugar market. Results indicate that most countries had a comparative advantage in the global sugar market during the period of 1961 to 2013. Further, most countries experienced declining comparative advantage over time, except for some African countries that emerged from initial states of extreme comparative disadvantage to marginal comparative (dis)advantage. Results further reveal structural changes and convergence in comparative advantage among ACP countries, induced by the coming into force of the Lomé Convention.

KEYWORDS:

• ACP
• sugar export competitiveness
• normalized revealed comparative advantage
• EU sugar policies

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Note that the normalization is implemented by dividing the deviation by the absolute value of the score for 1961 to 1965 because some of the scores could be negative. The direction of the deviation is, therefore, captured by the numerator. Using actual rather than absolute values would produce erroneous results where negative scores occur for a period $\bar{k}$.

² This is despite the fact that Brazil and Thailand had a comparative disadvantage in the 1960s.

³ However, the β coefficient estimate for Zambia is statistically insignificant, implying that the country’s comparative advantage was stagnant during 1961 to 1975.

⁴ The estimated coefficients for Kenya are, however, statistically insignificant, implying stagnant trends during both periods when viewed separately. However, single-period estimation yielded a statistically significant slope coefficient, implying that Kenya experienced rising competitiveness over the entire review period from 1961 to 2013.

⁵ Note, however, that Zimbabwe’s NRCA scores experienced a sharp rise between 1961 to 1965 and 1971 to 1975, after which they exhibited a downward trend.

⁶ The exception is Suriname which declined into a state of comparative disadvantage in the early 1970s and maintained that state throughout the remaining period.

⁷ Note that this was expected because 10 of the 19 ACP countries have positive δ coefficient estimates, compared to six with negative coefficients and three with statistically insignificant coefficients (Table 2). In turn, there was a net positive effect.

⁸ However, note that Australia’s NRCA scores were surpassed by those for Brazil in the last three periods and during the two periods between 1966 and 1975, and by a number of ACP and non-ACP countries during the period of 1961 to 1965.