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Competitiveness Of The Ph Furniture Industry Ua&P Study

1908 words - 8 pages

An Analysis on the Competitiveness of the Philippine Furniture Industry relative to ASEAN
Fe Lea V. Ajesta, Franc Anthony C. Figura, and Andrea Mystica D. Vicente

Revealed Comparative Advantage
Revealed Comparative Advantage (RCA) is a commonly accepted index of trade
competitiveness. It is based on the theory that a country would specialize on commodities in which it has
comparative advantage. There is comparative advantage in producing a commodity when the relative cost
of producing that commodity in the country is lower than a reference country group. A country is said to
have comparative advantage in a commodity when the RCA index exceeds one. If not, then it is said to
have ...view middle of the document...

15

0.19

0.39

0.25

0.04

0.00

0.03

0.00

0.00

0.01

0.00

0.02

Lamps

0.26

0.22

0.37

0.30

0.28

0.43

0.31

0.09

0.22

0.16

0.20

0.53

Overall

0.32

0.43

0.52

0.57

0.44

0.59

0.70

0.52

0.46

0.55

1.02

0.98

Furniture

On the other hand, the RCA indices of the Philippine furniture industry when it comes to
exporting outside the region are presented in Table 2. Once again, it can be seen that the Philippines is not
specializing in the production of furniture relative to ASEAN. In other words, furniture has a small share
in the total exports of the Philippines whereas other ASEAN countries such as Vietnam have placed more
focus on the exports of furniture. However, it can be seen that more specialization has been placed in the

production of lamps and lighting fittings relative to ASEAN. In addition, it can be observed that there has
been more specialization being placed on the production of mattresses in recent years. In other words,
these products have started becoming more competitive relative to ASEAN when it comes to exporting to
the extra-ASEAN market.
Table 2. Revealed Comparative Advantage of the PH furniture industry outside ASEAN
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Seats
0.50 0.46 0.49 0.54 0.43 0.40 0.44 0.33 0.39 0.54 0.43 0.33
Other

0.82

0.75

0.72

0.69

0.61

0.46

0.44

0.35

0.31

0.39

0.35

0.46

Mattresses

0.80

0.35

0.18

0.17

0.13

0.10

0.11

0.09

0.14

0.35

0.40

0.99

Lamps

2.69

2.44

2.22

1.81

1.94

1.20

1.20

0.93

1.03

1.01

1.02

1.80

Overall

0.79

0.71

0.69

0.67

0.59

0.46

0.46

0.36

0.35

0.47

0.42

0.52

Furniture

Shift-Share Analysis
Shift-share analysis is mostly used for studying the differences in the growth of exports according
to the shifts that have taken place in the market over time. It can determine if a change in export share has
occurred and it can trace the factors that may have accounted for the change. Export data (2001-2013)
obtained from Trademap.org was used. Also, the dates were bracketed into two time periods: 2002-09
(Pre-AEC) and 2010-13 (Post-AEC). The basis of the division was the removal of tariffs on furniture
exports to the ASEAN-6 countries (Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand) on
January 1, 2010. This is to see whether there is a change in the export competitiveness of the industry
after the removal of tariffs.
Definition of terms

Industry Mix Effect – refers to the allocation of resources (investments) to the industry; indicates
whether the Philippines specializes on the furniture industry

Competitive Effect – reflects the market advantage of the Philippine furniture industry over
ASEAN’s furniture industry; indicates whether PH furniture exports is growing faster/slower than...

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