Balassa Index Calculator

To calculate the Balassa Index, divide the share of a country’s exports of a product by its total exports and then divide that by the share of world exports of that product relative to total global exports.

The Balassa Index (BI), also known as the Revealed Comparative Advantage (RCA) index, is a measure used in economics to identify the relative advantage or disadvantage of a certain country in a specific industry or sector. This index helps to determine how competitive a country is in exporting a specific product compared to other nations.

A value greater than 1 indicates a comparative advantage, while a value less than 1 suggests a comparative disadvantage. The formula for calculating the Balassa Index is simple and easy to follow.

Formula:

$$\text{BI} = \frac{Eij / Ej}{Wi / W$$

Where:

• Eij = Exports of a product by a country.
• Ej = Total exports of that country.
• Wi = World exports of that product.
• W = Total world exports.

How to Calculate ?

1. Find product-specific exports: Identify the exports of a particular product by the country (Eij).
2. Get the total country exports: Look at the total exports for the country (Ej).
3. Find global exports of the product: Identify the global exports for that same product (Wi).
4. Get the total world exports: Determine the overall global exports (W).
5. Apply the formula: Plug the values into the formula to calculate the Balassa Index (BI).

Solved Calculations

Example 1:

$$\text{BI} = \frac{10,000 / 100,000}{500,000 / 5,000,000} = \frac{0.1}{0.1} = 1$$

Answer: The Balassa Index (BI) is 1, indicating neutral comparative advantage.

Example 2:

$$\text{BI} = \frac{50,000 / 500,000}{1,000,000 / 10,000,000} = \frac{0.1}{0.1} = 1$$

Answer: The Balassa Index (BI) is 1, indicating neutral comparative advantage.

Final Words:

This calculator simplifies the process of calculating the Balassa Index, empowering countries to make informed decisions and foster economic growth.