Competitiveness in global trade: the case of the automobile industry

Abstract

Numerous studies handle analyses of revealed comparative advantages of global trade (especially in agriculture sector) using Balassa index, but the selected automobile industry represents new potentials to study. This study focuses on the competitiveness of automobile industry, which is a key sector due to its high value-added activities, a competitive market, with increasing technology requirements and high employment characteristics. The aim of our paper is to analyse the revealed comparative advantages of global automobile trade as well as the duration and stability of Balassa indices by applying Markov transition probability matrices and Kaplan-Meier survival function. The source of data is global automobile exports at HS6 level for 1997-2016. The paper has reached numerous conclusions. First, by analysing characteristics of global automobile trade, it turned out that China, USA, Japan and Germany were the biggest producers of cars, however the top exporters were Germany, Japan and Canada in the period analysed, together giving 40% of all products exported – the top10 countries, however, gave 71% of concentration. Second, our analysis has made it clear that the most traded/exported automobile product is vehicle with only sparkling ignition internal combustion (1500-300cm 3) (870323) globally, giving more than 40% of all vehicle exports between 1997 and 2016. Third, the calculation of Balassa indices showed that Spain and Japan had highest comparative advantages in all periods analysed among the most important automobile exporters in the world.