China—Eastern Europe Agricultural Trade: (Dis)Advantages and Policy Responses

Abstract

Assessment of the competitive advantages of goods and countries is one of the cornerstones of contemporary macroeconomics. In agriculture, this assessment is complicated by various factors, such as natural conditions, technological capabilities of agricultural production, and food security concerns. This study aimed to address the specific advantages of different countries by using a five-stage algorithm to calculate the Revealed Comparative Advantage (RCA), Relative Trade Advantage (RTA), Lafay (LI), and Domestic Resource Cost Advantage (DRC) indices for eight Eastern European countries and their trade with China in 37 categories of food and agricultural products. These products were grouped into four categories based on their revealed advantages. Competitive advantages of Eastern European countries were found in sectors that require technology and capital, such as crops, cereal products, edible goods, and animal feed. The study contributed to linking trade and competitive advantages with production capabilities of individual countries. It suggested promoting externally oriented advantages for competitive products and redirecting the supply of marginally competitive and non-competitive goods to domestic markets.