IOSR Journal Report: Revealed Comparative Advantage in Rwandan Exports

This report provides a comprehensive analysis of Rwanda's exports, focusing on the concept of Revealed Comparative Advantage (RCA). It examines Rwanda's trade patterns and competitiveness in the global market, utilizing the Standard Balassa RCA Index to assess the country's specialization in various product lines. The study investigates the historical context, economic indicators, and the impact of government policies on Rwanda's export performance. It also reviews relevant literature on international trade and RCA, particularly in the context of African economies. The research identifies key export sectors, analyzes trends, and offers recommendations for enhancing Rwanda's export capabilities, including investments in research and development, technological advancements, and reforms in the industrial sector. The findings highlight the challenges and opportunities for Rwanda in international trade, emphasizing the need for diversification and increased competitiveness. The report concludes with insights into Rwanda's economic development and its integration into the global economy.

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Revealed Comparative Advantage: An Analysis of Exports of Rwanda
Article in IOSR Journal of Economics and Finance · May 2017
DOI: 10.9790/5933-0803036976
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IOSR Journal of Economics and Finance (IOSR-JEF)
e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 8, Issue 3 Ver. III (May - June 2017), PP 69-76
www.iosrjournals.org
DOI: 10.9790/5933-0803036976 www.iosrjournals.org 69 | Page
Revealed Comparative Advantage: An Analysis of Exports of
Rwanda
Mayank Gupta1, Harish Kumar2
1(Day Scholar, Shri Ram College of Commerce, University of Delhi, New Delhi)
2(Assistant Professor, Shri Ram College of Commerce, University of Delhi, New Delhi)
Abstract : The paper undertakes a detailed analysis of Revealed Comparative Advantage of the exports of
Rwanda. The objective of the research is to understand the Rwanda’s pattern of trade; to identify a change in
this pattern over the period of study; in support of the policies and strategies, to identify areas for improvement.
Rwanda is primarily an agrarian economy where people have been dependent on country’s natural endowments
for subsistence. A large population is still employed in the agricultural sector. The revealed comparative
advantage lies in primary products. There has been little change in the composition of exports. The Standard
Balassa Revealed Comparative Advantage Index (BRCAI) has been used for analysis. Rwanda’ RCAI in its
otherwise primary exports product lines has been declining owing to increasing pressure from the supply side.
Intense competition from other exporting economies has made Rwandan exports uncompetitive. The country
needs to invest in research and development, technological advancements and Education in order to boost
output and exports. The government needs to push reforms in industrial sector and open up the economy for
private players in more industries, especially agro-processing and leather-goods.
Keywords: Revealed Comparative Advantage, Balassa Index, Rwanda, Namibia, Export Competitiveness
I. Introduction
Located in eastern Africa, Republic of Rwanda, or normally Rwanda, is a small country which holds
strategic interests for various parties today. The country boasts a plethora of qualities which compel us to study
it in detail. Spanning across 26,338 sq. km of area, Rwanda is home to approximately 13 million people. After
the Genocide in 1994, the country embarked upon a journey of development which saw unprecedented level of
dedication and support from the end of all major stakeholders, especially the Rwandan Government.The
Government, after the genocide, thrived to resurrect the economy. From identification of strategic sectors to
implementation of various plans and policies successfully, the economy has achieved its growth targets with
pride. It is a landlocked country sharing its boundaries with Burundi, Democratic Republic of Congo, Tanzania
and Uganda. The country is rich in gold, Cassiterite (tin ore), Wolframite (tungsten ore), methane reserves, and
hydropower and arable land. Over 93% of its population is less than 55 years old. 74.5% of its land is used for
agriculture. Agriculture provides employment and subsistence to 90% of the population while its share in the
GDP is just 34.6%. Its GDP has grown at an average rate of 7-8% since 2003 and inflation has dropped to single
digits. 28.8% of its population lives in urban areas and rate of urbanization is 6.43%. The government has been
successful to make provision of basic facilities for a majority of population after the genocide. The literacy rate
is 70.5%. Tourism, minerals, coffee and tea are the main sources of foreign exchange earnings today. Mining,
Construction, Agriculture are the cornerstones of its economy. The government has been making sincere efforts
to make these and other related sectors more lucrative for foreign investments and improve country‟s socio-
economic situation. Rwanda displays rare qualities to become a major economy in the future based on its pro-
active, strong and stable government, rising literacy level and urbanization, falling infant and maternal mortality
rate, poverty and death rate. Its entry in the East African Community (EAC) has opened new opportunities.
Rwanda has been active in international trade since a long time. The country has been exporting cash
crops, primarily coffee and tea since colonial times and still depends on the same for a large chunk of its foreign
exchange earnings. Over the years, the product lines and categories that Rwanda exports in have expanded.
Though it is primarily an agrarian economy, it has started to export semi-processed and processed products as
well. With growing inter-dependence among all the countries in the world, the role of each one of them matters.
So, it becomes imperative to understand how Rwanda stands in Exports and where does its specialization lie.
The study is organized in the following sequence. Starting with introduction, a selective review of literature on
revealed comparative advantage and its application is done, especially in the Rwandan and African context.
Next, the objectives of study and methodology used have been specifically and precisely described. In chapter 4,
the analysis of comparative advantage of Rwandan Exports is undertaken and interpretation is done. Finally, in
the last chapter, conclusions are drawn and recommendations are given.

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
DOI: 10.9790/5933-0803036976 www.iosrjournals.org 70 | Page
II. Literature Review
International Trade is defined as the exchange of capital, goods and services across international
borders or territories. It has been prevalent since a millennium. Consistent with the way in which nations traded
with each other over time, economists developed theories to explain the mechanisms of global trade. The
phenomenon has evolved considerably over time. Ranging from the classical theory which talked about global
trade mechanics from a country‟s perspective, there are modern theories which talk about international trade
from a firm‟s perspective. But a basic question which intrigues us is „why do countries trade?‟ Trading across
borders provides various benefits. Adam Smith, in his book „The wealth of Nations‟, interpreted the meaning of
„Value‟ in two ways:
1) Exchange value
2) Consumption value
He propounded that some commodities possess exchange value, which make them of little use for
consumption but adept for being used as a medium of exchange. On the other hand, other commodities possess
consumption value, which possess utility for consumption but are incapable of being used for exchange.
International trade helps countries engaging in it to buy goods which hold consumption value in exchange of
goods which hold exchange value. Countries trade because of relative differences in prices of the same good
across different parts of the world. The relevance and importance of International Trade has increased
remarkably over the last two centuries, especially since the Industrial Revolution and can be gauged from the
growth in absolute value of exports over time. The figure 1 below shows the value of exports of goods and
services from 1960 to 2015. From US$155 Billion in 1960, the value has increased to US$ 21.27 Trillion, at a
compound annual growth rate of 9.36%.
Figure 1: Global Export Value Growth, 1960-2015
Further, a measure to look into the importance of International trade is to look at the share of traded
goods in relation to the size of the world economy. The share of exports in world GDP has increased from 12%
in 1960 to near 30% in 2015. Thus, trade is rising not only in absolute terms but also in relation to the size of the
world economy, hence gaining more importance.
Figure 2: Global Export of Goods & Services as a % of GDP, 1960-2015
The concept which suggests what an economy should export and import was coined for the first time in
the 18th Century by Adam Smith when he talked about „Absolute Advantage‟ in his book „The Wealth of
Nations‟. He advocated the idea of exporting those goods in which an economy has absolute advantage, i.e.
goods which the economy can produce at lesser cost of production than rest of the world. It advocates the
phenomenon that each country shall eventually shift its limited factors of production, assumed to be labour, to
produce those goods and services that it specializes in. Later, David Ricardo came up with a new concept in his
book „The Principles of Political Economy and Taxation‟ where he supported the idea of exporting only those
goods in which an economy enjoys „Comparative‟ Advantage. The idea of comparative advantage lied in

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
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opportunity cost of producing one commodity in place of another. If one country‟s opportunity cost of
producing a commodity, say A, in terms of loss of production of another commodity, say B, is less than that of
the other country, then it should export good A and the other country should import it. Countries with
technological prowess in production of a certain commodity shall require lesser unit of inputs to produce an
additional unit of its output than the other country. This is the epitome of the term „Revealed Comparative
Advantage‟. It is an arithmetic Equation which was given by Balassa(1965). Thus, Revealed Comparative
Advantage reckons the magnitude of comparative advantage that a country enjoys in exports of various goods.
In their Study, Divaries C. Jaravaza & Macleans Mzumara (2013)tried to find the comparative advantage of
Rwanda in different product lines. Their primary Objective was to assess whether membership of Common
Market for Eastern and Southern Africa (COMESA) helped Rwanda increase its comparative advantage in the
products it exports to its COMESA partners. They used RCA as Wu and Chen (2004) had put forward because it
shows relative comparative advantage of the same product in various countries and relative competitiveness of
various products within the same country. They concluded that Rwanda benefitted from intra-COMESA trade
and trade with global partners, and recommended that Rwanda should continue to export goods it has
comparative advantage in. Rwanda has very few products it specializes in. the EAC member states are gaining
from international trade as propagated by Ricardo (1817)and Heckscher-Ohlin. They recommended that the East
African Community should continue discussing with the Southern African Development Community (SADC)
and Common Market for Eastern and Southern Africa (COMESA) for possible merger. That way the
community could ensure trade creation rather than trade diversion considering the limited number products in
which the member states have comparative advantage. Mphumuzi Sukati (2016) studied the RCA of COMESA
Members in common agricultural commodities to search for opportunities to set up agro-processing industries in
these countries. The objective of his research was to determine the level of agro-processing in the region and
identify key commodities the member countries could focus on to set up agro-processing units. He used the
Standard Balassa (1965) Index for the analysis. However, he normalized the analysis using the approach
proposed by Laursen (2000). There is upper bound for products with a revealed comparative advantage but a
lower bound of 0 for products with revealed comparative disadvantage. The approach was:-
𝑅𝐶𝐴𝑘
𝑖 − 1
𝑅𝐶𝐴𝑘
𝑖 + 1
On the basis of data analysed (data from 2005 to 2013), it was found that Rwanda had high RCA in live
animals, raw hides and skins, leather and unprocessed coffee, and the country could foray into industries that
use these commodities as primary raw material for production.
Balassa & Noland (1989) studied the revealed comparative advantage of Japan and the United States.
with the objective of identifying changes in specialization of these two economies in product categories
differentiated on the basis of human skills involved. The authors used the standard RCAI coupled with the net
exports revealed comparativeadvantage Index. RCAI data was collected for 4-years intervals starting from 1967
till 1983. The product categories were classified into: Primary Goods, Unskilled-Labour Intensive Goods,
Humans-Capital Intensive Goods and Physical Capital Intensive Products. Their Study revealed that during the
period of study, Japan ratcheted up towards becoming a more human capital intensive industrial economy at the
cost of unskilled labour intensive and primary goods industries. The economy became increasingly specialized
in producing products requiring use of skilled labour. The U.S.A. increased its comparative advantage in
primary products category while its competitiveness in unskilled labour intensive and human capital intensive
products remained stable. The most striking revelation of their study was the strategic alignment and
complementary nature of the two countries‟ specializations in high-technology products. Japan and U.S.A.
didn‟t follow the same learning path in the technological space. In some product categories, Japan lost its
comparative advantage to the U.S.A. while in others, the U.S.A. lost its comparative advantage to Japan.
Ndayitwayeko and Ndimanya(2015) studied exports of the cash crop „Tea‟ of the East African Community
(EAC). Their objective was to find the degree of Comparative advantage enjoyed by EAC members in export of
tea to third market and how the pattern evolved over the period of study.They used the Normalized Revealed
Comparative Advantage (NRCA) introduced by Run et al. (2009) and Additive Revealed Comparative
Advantage (ARCA) introduced by Hoen and Oosterhaven (2006), and a time trend regression analysis model to
detect rise or fall in countries‟ comparative advantage in this cash crop.Their analysis showed that all EAC
members, except Uganda have considerably lost their comparative advantage during the period. Burundi has
been the most poorly performing country with a comparative disadvantage in this sector. Kenya, one of the
largest tea producers in the world also lost its competitiveness due to rising production efficiencies of
competitors, basically Sri Lanka, India and China. Ndayitwayeko, Odhiambo, Korir, Nyangweso and
Chepng‟eno(2014) studied the pattern of change in the revealed comparative advantage of EAC members in
Coffee. With main focus on Burundi, their objective was to identify how Burundi has performed against its EAC
members during the study period. They used the Normalized Revealed Comparative Advantage (Run et al.,

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
DOI: 10.9790/5933-0803036976 www.iosrjournals.org 72 | Page
2009) and time trend regression analysis model to discern whether countries lost or gained competitiveness
during the period under study. Their analysis reflected a gradual decline in the competitiveness in coffee exports
for all EAC members. Burundi‟s performance was the weakest with lowest export level and NRCA. The authors
suggested institutional reforms, privatization and liberalization of coffee sub-sectors to improve the quality and
quantity of exports in this region, especially in Burundi.
III. Research Design
Data
For the purpose of the study, the series covers the data from 2001 to 2015 in case of Rwanda. The
period of study chosen is based on the availability of data. Data covers 5000 entries for various product
classifications.
The study is based on export data as per the HS (H-S 1996) classification. Governed by "The
International Convention on the Harmonized Commodity Description and Coding System", the Harmonized
Commodity Description and Coding System generally referred to as "Harmonized System" or simply "HS" is a
multipurpose international product nomenclature developed by the World Customs Organization (WCO). It
comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a legal and logical
structure and is supported by well-defined rules to achieve uniform classification. The system is used by more
than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade
statistics. Over 98 % of the merchandise in international trade is classified in terms of the HS. The HS
contributes to the harmonization of Customs and trade procedures, and the non-documentary trade data
interchange in connection with such procedures, thus reducing the costs related to international trade. It is also
extensively used by governments, international organizations and the private sector for many other purposes
such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport
statistics, price monitoring, quota controls, compilation of national accounts, and economic research and
analysis. The HS is thus a universal economic language and code for goods, and an indispensable tool for
international trade. Data on worldwide exports by industry are extracts from the data portal World Integrated
Trade Solution (WITS), maintained by The World Bank in close collaboration with the United Nations
Conference on Trade and Development (UNCTAD). The ultimate source of the exports data is the United
Nation Statistical Division (UNSD) Commodity Trade (COMTRADE) database that contains exports by
commodity and partner country. Values are recorded in U.S. dollars.
Methodology
The paper utilizes the measure of the index of Revealed Comparative Advantage (RCA) as introduced
by Balassa (1965). The central idea to determine a country‟s export 'strong' sectors by analysing its actual export
flows was pioneered by Liesner (1958). This procedure was refined by Bela Balassa (1965, 1989) to form the
now popularly known 'Balassa Index'. Since the actual export flows „reveal‟ the country‟s sectoral strength, it is
also known as Revealed Comparative Advantage.
As per this measure, a country's comparative advantage is „revealed‟ by the relative export performance
of individual product categories to the global export performance relative to that product category.
Formulaically, the Revealed Comparative Advantage is expressed as:
RCAij =
𝑥𝑖𝑗
𝑥𝑤𝑗
𝑋𝑖
𝑋𝑤
where,
RCAij = Revealed comparative advantage of the ith country‟s, jth industry,
xij = Merchandise exports of the jth industry by the ith country,
Xi = Total merchandise exports of the ith country,
xwj = World merchandise exports of the jth industry,
Xw = Total merchandise world exports.
Many countries are, for example, producing and exporting cars. To establish whether a country, say
Japan, holds a particularly strong position in the car industry, Balassa argued that one should compare the share
of car exports in Japan‟s total exports with the share of car exports in a group of reference country‟s total
exports. The Balassa index is therefore essentially a normalized export share. More specifically, if BI Aj is
country A‟s Balassa index for industry j, this is defined as to:

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
DOI: 10.9790/5933-0803036976 www.iosrjournals.org 73 | Page
If BIAj >1, country A is said to have a revealed comparative advantage in industry j, since this industry
is more important for country A‟s exports than for the exports of the reference countries i.e. If the RCA index
for a particular industry is greater than 1, it implies that the country has a revealed comparative advantage in the
exports/imports of that industry and vice-versa.
As such for any particular country, Sector i‟s revealed comparative advantage in year t is:
RCA i,t=
𝑋𝑖 ,𝑡
𝐶𝑜𝑢𝑛𝑡𝑟𝑦
𝑋𝑘 𝑘 ,𝑡
𝐶𝑜𝑢𝑛𝑡𝑟𝑦
𝑋𝑖 ,𝑡
𝑊𝑜𝑟𝑙𝑑
𝑋𝑘 ,𝑡
𝑊𝑜𝑟𝑙𝑑
𝑘
The paper employs descriptive and analytical statistics to explain its objectives of measuring export
competitiveness and comparative advantages in the African country.
IV. Objectives Of Study
The study has been undertaken with the following objectives in mind:
1. To understand the pattern of exports of Rwanda
2. To identify changes in the pattern of Rwandan Exports
3. To identify the core areas of Rwanda where it specializes
V. Analysis & Interpretation
The Analysis of Rwanda‟s RCA has been carried out at the chapter, sector and product, and sub-
product level i.e. 4 Digit and 6 Digit level HS-1996 Classification. It has been done because pattern of trade may
differ at different levels of disaggregation within a chapter. First of all, the top ten chapters where Rwanda has
highest RCA have been studied followed by their classifications and sub classifications. Subsequently, sudden
breakouts in the RCA of any chapter or its classifications have been discussed. Finally, the last part looks at the
RCA in terms of types of goods traded. At the aggregate level, Rwanda enjoyed comparative advantage in 24
out of 76 chapters it exported in 2015. In the first year of study, this figure was 6 out of 32 chapter goods that
the country exported. At the most dis-aggregated level, i.e. the 6-Digit level, Rwanda had comparative
advantage in 189 goods in 2015. This figure was 27 in 2001. Ores, Slag and Ash (C-26) occupied the top spot in
2001 with RCA of 27.86. It has relegated to third spot in 2015 with RCA 22.2.
Table 1: Top ten products as per RCA for Rwanda
Chapter Chapter Name RCA(2015)
09 Coffee, tea, matï and spices. 81.46
11 Prod.mill.indust; malt; starches; inulin; wheat g 42.79
26 Ores, slag and ash. 22.2
01 Live animals 9.3
41 Raw hides and skins (other than furskins) and lea 8.58
78 Lead and articles thereof. 7.25
15 Animal/veg fats & oils & their cleavage products; 6.66
25 Salt; sulphur; earth & ston; plastering mat; lime 5.68
10 Cereals 4.71
07 Edible vegetables and certain roots and tubers. 2.97
In 2015, Top Spot was occupied by Coffee, Tea, Mati & Spices (C-09). This chapter held significance
in earlier years too. In the late 1990s after the genocide, the Rwandan Government recognized the potential of
coffee and tea as cash crops and export value products, and implemented several policies and strategies
(National Coffee Strategy and National Tea Strategy) to make coffee and tea a priority sector. Through Research
in better harvesting practices, farmer education, designation of more area for cultivation of these crops, better
marketing opportunities, etc. Rwanda became one of the largest exporters of high quality coffee beans and Tea.
In 2015, It generated over 22% of Export Revenue for the country. It has maintained its top spot in the RCA
ranking since 2003. However, the RCA of Chapter 9 has fallen over the years. Increasing competition from
other tea and coffee exporters made Rwandan exports uncompetitive. To counter this problem, Rwandan
government focused on niche markets by catering to the needs of a handful of importing countries through
marketing its coffee as one of the best qualities coffee in the world. This has helped Rwandan coffee growers
fetch attractive price for their produce even amid rising volatility in world coffee markets. In case of tea, falling
prices due to increased supply, loopholes in supply chain, lack of investment in research &development, and
education kept export value of Rwandan tea stagnant. In 2001, C-09 comprised of 50% of total Exports of
Rwanda. The proportion has fallen to 22.78% in 2015. The growth of Rwanda‟s Coffee exports (0901) has been
commensurate with growth of this sub-category in the entire world. Between 2001 and 2015, export value of

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
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this category increased by CAGR of 10.68% while growth of Rwanda‟s export was marginally lower with
CAGR of 10.15%. Moreover, Tea (0902) world export value grew by CAGR of 6.06% while that of Rwanda
grew by CAGR 9.79% during the period under review.
Other chapters in the top 10 list include Live Animals (C-01), Raw Hides and Skins (C-41), Lead and
Articles thereof(C-78), Animal/Veg Fats & oils (C-15), Salt, Sulphur, Earth & Stone; Plastering Materials; Lime
(C-25), Cereals (C-10) and Edible Vegetables and certain roots and tubers (C-07) with comparative advantage
9.3, 8.59, 7.25, 6.66, 5.68, 4.71 and 2.97 respectively. Ores, Slag and Ash (C-26) had the 3 rd largest RCA in
2015, but its comparative advantage has ebbed during the period under study. Mining Industry is the Rwanda‟s
second largest export earner. Rwanda‟s comparative advantage lies chiefly in Tin (2609), Tungsten (2611),
Niobium, Tantalum, Vanadium ores (2615). In 2006-07, Government privatized most of the mining concessions
which boosted this sector‟s performance in terms of production and export earnings. It has been one of the most
crucial sectors since the beginning of period under review. Tantalum, Vanadium ores exports have been a
significant contributor in export revenue of Rwanda since 2001. The export value has fluctuated over the years,
but there is an uptrend. The RCA, commensurate with export value, has fluctuated. But there is an uptrend up
till 2013. In 2014 and 2015, the RCA declined due to fall in export value. Tin ores RCA has fallen from a high
of 31365 in 2004 to a low of 3743 in 2014. It was 4743 in 2015. Lac, Gum, resins & other Vegetable saps &
extracts (C-13), with RCA 14.64 in 2001, doesn‟t appear in the top 10 ranks in 2015. Lac; gums & resins etc (C-
13) haven‟t been a substantial part of Rwanda‟s Exports ever. They accounted just 0.5% of the country‟s total
exports in 2001. Additionally, the products under this chapter were not exported at all 2013 onwards (a few
hundred $ in 2013). Only 2 products under the sub-category “Vegetable saps and extracts; pectic substances,
pectinates and pectates; agar-agar and other mucilages and thickeners derived from vegetable products, whether
or not modified(1302)” were exported during some years before 2013.
The exports of live sheep and goats has been falling since 2012. The dominant share in this category is
of Goats. Their export value has fallen from $693.49K in 2012 to $67.27K in 2015. As a result, the RCA of
Rwanda in this category has also witnessed a downtrend. It has fallen from a high of 20 in 2011 to as low as 1.2
in 2015. In Cereals(C-10), Rwanda enjoys comparative advantage in Rice. The country started exporting rice in
2005 and the export value has increased from $40k Dollars in 2005 to $16.62M in 2015. Initially, the RCA was
less than 1. But since 2012 country‟s comparative advantage in this commodity has been greater than 1, growing
from 5.35 in 2012 to 20.41 in 2015. This was the result of government‟s efforts to make Rwanda a self-
sufficient nation in paddy by harnessing the naturally appropriate climatic conditions for paddy production,
increasing the area under cultivation for paddy, and projecting the country as a potential exporter to the East
African Community (EAC).
In sugar and sugar confectionery (C-17), Rwanda had comparative advantage in chewing gums
(170410) for 4 consecutive years from 2012 to 2015. Incentives for setting up industries is a welcoming signal
for companies to manufacture in Rwanda and this is benefitting Rwanda in the form of rising export revenue
from products in this chapter. Under Chapter 15, Rwanda has been witnessing rising comparative advantage on
account of increasing exports of Vegetable fats and oils and their fractions (151620). The export value continues
to increase and so is the RCAI.
Under miscellaneous edible preparations (C-21), tomato ketchup (210320), active yeast (210210) and
prepared baking powders (210230) had a comparative advantage in greater than 1. RCAI of tomato ketchup has
increased from 22.24 in 2013 to 36.25 in 2015. Tomato is one of the primary vegetables produced in Rwanda.
With government support, processing units have been set up which have increased exports of tomato pastes and
ketchups lately. Under Salt; Sulphur; Earth & Stone; Plastering Material; Lime (C-25), Rwanda enjoyed
Comparative Advantage in Salt (2501), Portland, Aluminium, Slag Cement, etc. (2523). The export value of Salt
(table salt and denatured) (250100) has increased remarkably over time and has been consistently growing since
2009. From $ 22.3K in 2009, it increased to $1.47M in 2015. Consequently, the RCAI has increased from 0.51
in 2009 to 17.02 in 2015. Exports of Portland cement (252329) have also increased considerably over the last
decade and hence, its RCAI has risen over this period. From export value of a mere $13.7K in 2004, it increased
to over $5.15M in 2015. RCAI was 0.34 in 2004 which stood at 23.46 in 2015.
Over the last 3 years, the exports of unwrought lead (7801) from Rwanda have improved in value,
which has had a positive effect on its comparative advantage in chapter 78. Export value was $94.3K in 2013
with RCAI 0.48. It increased to $611K and $1.67M, and RCAI increased to 2.87 and 8.76 in 2014 and 2015
respectively. Under Beverages, Spirits and Vinegar (C-22), Waters, including natural and artificial mineral
waters (2201), Waters, including minerals waters and aerated waters (2203) and Beers made from Malt (2203)
have had comparative advantage for past few years. Export value of sub-chapter 2201 has increased
consistently. Its comparative advantage though, has remained relatively stable over time. It ranged between 1-5
during 2010 and 2015. Sub-Chapters 2202 and 2203 give a mixed picture. Export value of beer from malt
(2202) increased from 2005 till 2008, then decreased in 2009. It started to increase from 2009 until it fell again

Revealed Comparative Advantage: An Analysis of Exports of Rwanda
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in 2014 and further in 2015. Its RCAI resonate the same volatility. The trend of sub-chapter 2203 shows the
same volatility in both export value and RCAI.
Products under Works of Art; Collectors‟ pieces and antiques (C-97) have always been a miniscule part
of Rwanda‟s Exports. However, the country‟s comparative advantage in this chapter‟s products had been greater
than 1 during some part of the study. Original Sculptures and Statuary, in any material (9703) have been the
most significant component of this chapter for Rwanda since 2001. Its RCAI index peaked at 11.2 in 2007 when
export value was $ 365K. Since then, the export value and consequently, the RCAI reveal a downtrend in this
sub-chapter. Only in 2015 did the RCAI increased to 1.86. Rwanda Exported $1.39M worth of Paintings,
Drawings and Pastels, executed completely (9701) in 2008 and its RCAI was 3.7. But the advantage couldn‟t be
maintained for long as export value declined and RCAI turned less than 1 in 2011. Collectively, the country
enjoyed comparative advantage in this chapter until 2010. Under Chapter 27-Mineral fuels, oils and products of
their distillation; Bituminous substances; mineral waxes- formed 67% of Rwanda‟s total Exports in 2001. As the
economy grew and variety of products traded expanded, products of this chapter started to assume lesser
importance for the economy. Petroleum oils and oils obtained from bituminous minerals (excluding crude);
preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these
oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or
bituminous minerals (2710) form the greatest portion of this chapter in Rwanda. Since 2009, the RCAI of this 4-
digit Code has been increasing steadily and turned advantageous in 2012. It stood at 4.08 in 2015. In 2015, the
export value of this sub-chapter was $ 86.23 M and it formed 14.9% of total export value.
VI. Conclusion & Recommendations
A detailed analysis was conducted of the Rwanda‟s export competitiveness both at the aggregated and
dis-aggregated level. From the analysis and interpretation, it is safe to say that Rwandan economy has grown
and expanded during this period. New products have started to be produced and exported. This is evident from
the fact that primary pillars of the country‟s export, i.e. Coffee, tea, different ores and minerals, Raw hides and
skins have been growing in value but their proportion in total export value have been falling. A pro-active
approach of the government to turn Rwanda into a manufacturing hub for various types of goods, both semi-
processed and processed is paying off. However, a downward trend in the RCA value for most of its primary
exports is a signal that the country‟s competitiveness in their production is fading. This is happening due to
technological, physical and financial constraints. Its agrarian status offers it a large opportunity to invest in agro-
processing industry. The country produces such agricultural goods, which, if processed and converted into high
value goods, can boost country‟s position in global value chain and help it tap a wider international market base.
Amid growing uncertainty in the global market, increasing volatility in prices of agricultural and
commercial commodities which are governed by international market forces, it is essential for a country like
Rwanda to portray itself as a brand to the world. Branding can help Rwanda minimize the negative impacts of
price volatilities and minimize the risk of global uncertainty. This can happen only through setting up of a strong
industrial base in the country for manufacturing those goods whose raw material requirement can be filled by
indigenously produced goods, basically agricultural goods. The country needs to reduce its dependence on
commodities which have sustained it since the beginning. A boost in industrial sector would lead to more
employment opportunities and expansion in the services sector as well, eventually shifting its economy to an
industrial or service economy status. Investment in Research & Development and education would be crucial for
the country to enhance the skills and competencies of its labour. Overall, Rwanda shows bright signs of
becoming an export oriented economy with comparative advantage in semi-processed and processed goods.
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