REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART I:
Table 4: The indicator of the ratio between unit value of
exports and imports (RUV) in 2005
SITC PRODUCTS RUV RCA % EXPORTS
Bosnia and Herzegovina
048 Cereal 1.40 -0.49 0.59870
285 Aluminum 1.36 0.13 4.83567
713 Piston engines and parts 1.30 0.11 7.82918
Croatia
272 Fertilizers 16.39 -3.99 0.00005
613 Fur 9.27 0.02 0.03013
515 Organic compounds 7.48 -0.58 0.12720
Macedonia
012 Meat 4.28 -0.62 0.71033
048 Cereal 2.19 -0.34 0.69073
676 Iron and steel 1.46 -0.85 0.71033
Serbia and Montenegro
248 Wood 1.74 -0.03 1.48370
061 Sugars, molasses and honey 1.65 0.59 4.22487
Source: COMEXT, own calculations.
The analysis of the results leads to the conclusion that the great majority of products in
which the observed countries realize the highest values of the RUV indicator belong to
the sphere of raw materials or labour-intensive products. Compared to other analyzed
countries, Croatia has the largest number of the products at the three digit level of SITC
which have the values of the RUV indicators above 1.15 (vertical specialization with high
value added products). At the same time common characteristics for all countries are a
domination of horizontal specialization and vertical specialization with low value added
products in the trade structures. Also, it is noted that for Croatia and Macedonia none of
the first three products have an export share higher than 1.0%. On the other hand, the first
three products according to the RUV indicator for Bosnia and Herzegovina and Serbia and
Montenegro have a significant role in their exports structures. However, the values of the
RUV indicator in these countries are pretty low.
The analysis of comparative advantages, intra-industry trade and trade specialization does
not reveal an unambiguous conclusion for overall trade patterns. On the one hand, there
are sectors with comparative advantage, while on the other hand there are sectors which
do not have comparative advantage. At first sight the unfavourable ratio on behalf of the
sectors without comparative advantage does not have to necessary lead to a conclusion
about unfavourable trade structures. The reason is a characteristic of small countries where
it is expected that comparative advantages and trade specialization will be found in a
smaller number of sectors and products. However, the results of the correlation analysis
for all products at the three digit level of SITC show that products with a higher level of
comparative advantage do not have a higher ratio between the unit value of exports and
imports. This points to unfavourable trade patterns.
84