Argentina's trade pattern specialization in MERCOSUR

This study investigates the intra-regional trade of Argentina in the Southern Cone Common during the period 1991--97. MERCOSUR is becoming the test ground for Argentina and its trading partners for the benefits which derive from each nation pursuing its own comparative advantage. Since the law of comparative advantage represents a universally applicable conceptual framework for interpreting international patterns of specialization, that theory is used as a tool to identify those sectors where Argentina has revealed comparative advantage relative to its MERCOSUR trading partners.; In this paper the revealed comparative advantage (RCA) developed by Bela Balassa is used to measure comparative advantage. That indicator provides us with information about Argentina's export structure in MERCOSUR and about its specialization in particular industry groupings.; Trade theories attempt to explain links between characteristics of countries and characteristics of their tided goods. Hence, this paper distinguishes Argentinean manufactured goods according to their factor intensities. The concept of factor-intensity was crucial to the explanation of Argentines comparative advantage and Argentinean trade structure in MERCOSUR. In this paper four were built based on an industry grouping that showed a given factor-intensity. The study measured the RCA of Argentina in MERCOSUR for a given industry group characterized by a relative factor intensity. By doing so, areas of strengths and weaknesses were identified, as these are revealed by past export performance.; The RCA of Argentina for a given industry group is used in conjunction with the competitive matrix developed by Jacques Mandeng. The competitive matrix of Argentina with regard to changing market patterns in MERCOSUR is based on the share/growth matrix of the Boston Consulting Group. If competitiveness is Argentina's major concern in international trade, then the country should also be concerned about the attractiveness of the sectors in which it is competitive. The ability to direct competitiveness towards the evolution of MERCOSUR will enhance intra-regional trade. Evidence is given of the factor intensity groups that fall within a given quadrant of the competitive matrix. That is, according to this method, market growth should determine the directions of specialization and competitiveness of Argentina. It is hoped that the results of this research will be useful to policy makers and managers in developing clusters in industries in which them is a comparative advantage or an increasing RCA index.