Determining comparative advantage through DRC analysis : guidelines emerging from CIMMYT's experience

Morris, M.L. (1990) Determining comparative advantage through DRC analysis : guidelines emerging from CIMMYT's experience. Working Paper. CIMMYT, Lisboa, Mexico.

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Knowledge of comparative advantage is important for developing countries, because potential welfare gains from specialization and trade can be used to foster economic growth. One practical difficulty with using comparative advantage for designing agricultural policies or allocating research resources is that comparative advantage is difficult to determine empirically. The domestic resource cost (DRC) framework of analysis offers a way of empirically measuring comparative advantage by generating quantitative indicators of the efficiency of using domestic resources to produce a given commodity, as measured against the possibilities of trade. These quantitative indicators provide an empirical measure of comparative advantage. At the same time, the analytical framework allows the distortionary effects of government policies to be measured. The paper first describes the basic DRC methodology, using examples drawn from a series of case studies carried out over the past five years by the CIMMYT Economics Program. This step-by-step description of the DRC methodology is a concise, non-technical guide for use in conducting applied comparative advantage studies and addresses a number of practical and conceptual problems commonly encountered. The paper then summarizes a number of lessons learned over the years at CIMMYT and evaluates the usefulness of the DRC framework as a tool for applied policy analysis and research resource allocation.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Enterprise Budgets, Market Prices, Social Prices, wheat, small-scale; RP6835
Author Affiliation: International Maize and Wheat Improvement Center
Subjects: Social Sciences
Divisions: General
Depositing User: Ms Ishrath Durafsha
Date Deposited: 19 May 2014 07:45
Last Modified: 19 May 2014 07:45

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