Research on World Agricultural Economy

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

Vasilii Erokhin

School of Economics and Management, Harbin Engineering University, Harbin, 150001, China

Anna Ivolga

Faculty of Service and Tourism, Stavropol State Agrarian University, Stavropol, 355017, Russia

Natalia Lazareva

Economic Security and Auditing Department, North Caucasus Federal University, Stavropol, 355017, Russia

Victoria Germanova

Faculty of Accounting and Finance, Stavropol State Agrarian University, Stavropol, 355017, Russia

Elena Igonina

Department of Economics and Economic Security, Nizhny Novgorod Academy of the Ministry of Internal Affairs of Russia, Nizhny Novgorod, 603144, Russia

Alexander Sofin

Department of Forensic Accounting and Accounting, Nizhny Novgorod Academy of the Ministry of Internal Affairs of Russia, Nizhny Novgorod, 603144, Russia

DOI: https://doi.org/10.36956/rwae.v5i2.1091

Received: 26 April 2024; Received in revised form: 18 May 2024; Accepted: 29 May 2024; Published: 21 June 2024

---

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.

Keywords: Agricultural trade; Comparative advantage; Competitive advantage; Trade advantage; Food security

---

References

[1] Ghose, B., 2014. Food security and food self-sufficiency in China: From past to 2050. Food and Energy Security. 3(2), 86–95. DOI: https://doi.org/10.1002/fes3.48

[2] Erokhin, V., Gao, T., Chivu, L., et al., 2022. Food security in a food self-sufficient economy: A review of China’s ongoing transition to a zero hunger state. Agricultural Economics—Zemedelska Ekonomika. 68(12), 476–487. DOI: https://doi.org/10.17221/278/2022-AGRICECON

[3] Zhou, Z., 2010. Achieving food security in China: Past three decades and beyond. China Agricultural Economic Review. 3(2), 251–275. DOI: https://doi.org/10.1108/17561371011078417

[4] Tian, G., Wang, C.H., Tian, K., et al., 2018. Food consumption and economic development in contemporary China. Contemporary Chinese Political Economy and Strategic Relations: An International Journal. 4(3), 1179–1206.

[5] Liang, X., Jin, X., Xu, X., et al., 2023. Uncertainty in China’s food self-sufficiency: A dynamic system assessment. Sustainable Production and Consumption. 40, 135–146. DOI: https://doi.org/10.1016/j.spc.2023.06.009

[6] Declaration of the World Summit on Food Security [Internet] [cited 2024 Apr 20]. Available from: https://www.fao.org/3/k6050e/k6050e.pdf

[7] Zhao, M., 2016. The belt and road initiative and its implications for China-Europe relations. The International Spectator. 51(4), 1–10. DOI: http://dx.doi.org/10.1080/03932729.2016.1235819

[8] Food security in China [Internet] [cited 2024 Apr 20]. http://www.scio.gov.cn/m/zfbps/32832/Document/1666228/1666228.htm?from=singlemessage&isappinstalled=0

[9] China Adopts New Law to Safeguard Food Security [Internet] [cited 2024 May 16]. https://english.www.gov.cn/news/202312/30/content_WS658f637cc6d0868f4e8e29f4.html

[10] Song, W., 2017. China’s relations with Central and Eastern Europe: From “old comrades” to new partners. Routledge: London. pp. 1–258.

[11] Data center [Internet] [cited 2024 Apr 20]. https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_ChosenLang=en

[12] Zhou, Z., Liu, H., Cao, L., et al., 2014. Food consumption in China: The revolution continues. Edward Elgar Publishing: Cheltenham. pp. 1–200.

[13] Gao, T., Ivolga, A., Erokhin, V., 2018. Sustainable rural development in Northern China: Caught in a vice between poverty, urban attractions, and migration. Sustainability. 10(5), 1467. DOI: https://doi.org/10.3390/su10051467.

[14] Van der Putten, F.-P., Seaman, J., Huotari, M., et al., 2016. Europe and China’s new silk roads. Contemporary Chinese Political Economy and Strategic Relations.6(1), 397–407.

[15] Megits, N., Neskorodieva, I., Schuster, J., 2020. Impact assessment of the COVID-19 on trade between Eastern Europe and China. Journal of Eastern European and Central Asian Research. 7(3), 385–399. DOI: https://doi.org/10.15549/jeecar.v7i3.579

[16] Ella, D., 2018. China-Europe relations: Opportunities and risks. The European Union in turbulent times: Challenges, trends, and significance for Israel. Institute for National Security Studies: Tel Aviv. pp. 81–89.

[17] Yastrubskyy, M., Wang, Z., 2023. Characteristics and development trends of China-Ukraine economic and trade cooperation under the “Belt and Road” initiative. Kyiv Economic Scientific Journal. 1, 93–201. DOI: https://doi.org/10.32782/2786-765X/2023-1-12

[18] Lypko, N., 2022. The gravity model of trade: The case of Central and Eastern Europe. LeXonomica. 14(2), 187–212. DOI: https://doi.org/10.18690/lexonomica.14.2.187-212.2022

[19] Qi, M., 2020. The study on the agricultural trade pattern between China and Central and Eastern Europe countries under the “16 + 1” cooperation mechanism. HOLISTICA—Journal of Business and Public Administration. 11(1), 69–78. DOI: http://dx.doi.org/10.2478/hjbpa-2020-0006

[20] Zhang, D., Sun, Z., 2022. Comparative advantage of agricultural trade in countries along the Belt and Road and China and its dynamic evolution characteristics. Foods. 11(21), 3401. DOI: https://doi.org/10.3390/foods11213401

[21] Erokhin, V., Li, D., Du, P., 2020. Sustainability-related implications of competitive advantages in agricultural value chains: Evidence from Central Asia—China trade and investment. Sustainability. 12(3), 1117. DOI: https://doi.org/10.3390/su12031117

[22] Erokhin, V., Gao, T., Ivolga, A., 2021. Cross-country potentials and advantages in trade in fish and seafood products in the RCEP member states. Sustainability. 13(7), 3668. DOI: https://doi.org/10.3390/su13073668

[23] Balassa, B., 1965. Trade liberalization and revealed comparative advantage. The Manchester School. 33, 99–123. DOI: https://doi.org/10.1111/j.1467-9957.1965.tb00050.x

[24] Do, Q., Levchenko, A., Raddatz, C., 2016. Comparative advantage, international trade, and fertility. Journal of Development Economics. 119, 48–66. DOI: https://doi.org/10.1016/j.jdeveco.2015.10.006

[25] French, S., 2017. Revealed comparative advantage: What is it good for? Journal of International Economics. 106, 83–103. DOI: https://doi.org/10.1016/j.jinteco.2017.02.002

[26] Senyshyn, O., Kundytskyj, O., Klepanchuk, O., 2019. An index analysis for the assessment of the competitiveness of food products in Ukraine. Journal of Competitiveness. 11(2), 130–143. DOI: https://doi.org/10.7441/joc.2019.02.09

[27] Grancay, M., Dudás, T., Mura, L., 2022. Revealed comparative advantages in academic publishing of “old” and “new” European Union member states 1998–2018. Scientometrics. 127(3), 1247–1271. DOI: https://doi.org/10.1007/s11192-021-04251-z

[28] Konstantakopoulou, I., Tsionas, M., 2019. Measuring comparative advantages in the Euro area. Economic Modelling. 76, 260–269. DOI: https://doi.org/10.1016/j.econmod.2018.08.005

[29] de Lucio, J., Mínguez, R., Minondo, A., et al., 2020. The contribution of granular and fundamental comparative advantage to European Union countries’ export specialisation. World Economy. 43(11), 2983–3005. DOI: https://doi.org/10.1111/twec.12989

[30] Fenna, A., 2016. Shaping comparative advantage: The evolution of trade and industry policy in Australia. Australian Journal of Political Science. 51(4), 618–635. DOI: https://doi.org/10.1080/10361146.2016.1239565

[31] Sheldon, I., Chow, D., McGuire, W., 2018. Trade liberalization and constraints on moves to protectionism: Multilateralism vs. regionalism. American Journal of Agricultural Economics. 100(5), 1375–1390. DOI: https://doi.org/10.1093/ajae/aay060.

[32] Adhikari, S., Poudel, D., Gopinath, M., 2023. Is policy greasing the wheels of global palm oil trade? Research on World Agricultural Economy. 4(2), 62–77. DOI: https://doi.org/10.36956/rwae.v4i2.859

[33] Mariotti, S., 2023. Competition policy in the new wave of global protectionism. Prospects for preserving a FDI-friendly institutional environment. Journal of Industrial and Business Economics. 50, 227–241. DOI: https://doi.org/10.1007/s40812-023-00263-3

[34] Costinot, A., Donaldson, D., Vogel, J., et al., 2015. Comparative advantage and optimal trade policy. Quarterly Journal of Economics. 130(2), 659–702. DOI: https://doi.org/10.1093/qje/qjv007

[35] Anderson, K., 2020. Trade protectionism in Australia: Its growth and dismantling. Journal of Economic Surveys. 34(5), 1044–1067. DOI: https://doi.org/10.1111/joes.12388

[36] Mgeni, C.P., Sieber, S., Amjath-Babu, T.S., et al., 2018. Can protectionism improve food security? Evidence from an imposed tariff on imported edible oil in Tanzania. Food Security. 10(4), 799–806. DOI: https://doi.org/10.1007/s12571-017-0746-3

[37] Arisoy, H., 2020. Impact of agricultural supports on competitiveness of agricultural products. Agricultural Economics—Zemedelska Ekonomika. 66(6), 286–295. DOI: https://doi.org/10.17221/416/2019-AGRICECON

[38] Kumar, K.N.R., 2022. Competitiveness of Indian agricultural exports: A constant market share analysis. Research on World Agricultural Economy. 3(2), 25–38. DOI: https://doi.org/10.36956/rwae.v3i2.514

[39] Smutka, L., Maitah, M., Svatos, M., 2018. Changes in the Czech agrarian foreign trade competitiveness—Different groups of partners’ specifics. Agricultural Economics—Zemedelska Ekonomika. 64(9), 399–411. DOI: https://doi.org/10.17221/399/2016-AGRICECON

[40] Shubravska, O., Prokopenko, K., 2022. The agricultural sector of Ukraine in the global food market: Pre-war state and Post-war prospects. Research on World Agricultural Economy. 3(4), 1–11. DOI: https://doi.org/10.36956/rwae.v3i4.693

[41] Badu-Prah, C., Agyeiwaa-Afrane, A., Gidiglo, F., et al., 2023. Trade, foreign direct investment and agriculture in developing countries. Research on World Agricultural Economy. 4(3), 1–14. DOI: https://doi.org/10.36956/rwae.v4i3.861

[42] Mansourzadeh, M.J., Shahmoradi, B., Dehdarirad, H., et al., 2019. A note on using revealed comparative advantages in scientometrics studies. Scientometrics. 121(1), 595–599. DOI: https://doi.org/10.1007/s11192-019-03207-8

[43] Xie, S., 2019. Why comparative advantage is a problematic guide to practical policy. Economic Affairs. 39(2), 243–250. DOI: https://doi.org/10.1111/ecaf.12347

[44] Szczepaniak, I., 2019. Changes in comparative advantages of the Polish food sector in world trade. Equilibrium - Quarterly Journal of Economics and Economic Policy. 14(3), 463–480. DOI: https://doi.org/10.24136/eq.2019.022

[45] Erdem, T., 2020. Competitiveness of dried sector: A case study of world and Turkey. Agricultural Economics—Zemedelska Ekonomika. 66(8), 365–372. DOI: https://doi.org/10.17221/98/2020-AGRICECON

[46] Urba, S., Senyshyn, O., Zamroz, M., et al., 2023. Assessment of export capacity of agricultural sector in the context of international competitiveness. Management Theory and Studies for Rural Business and Infrastructure Development. 45(1), 67–78. DOI: https://doi.org/10.15544/mts.2023.08

[47] Vollrath, T., 1985. Dynamics of comparative advantage and the resistance to free trade. USDA: Washington, DC. pp. 1–20.

[48] Vollrath, T., 1991. A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage. Weltwirtschaftliches Archiv. 127(2), 265–280. DOI: https://doi.org/10.1007/BF02707986.

[49] Simo, D., Mura, L., Buleca, J., 2016. Assessment of milk production competitiveness of the Slovak Republic within the EU-27 countries. Agricultural Economics—Zemedelska Ekonomika. 62(10), 482–492. DOI: https://doi.org/10.17221/270/2015-AGRICECON

[50] Hristov, K., Beluhova-Uzunova, R., Shishkova, M., 2019. Competitive advantages of Bulgarian sunflower industry after the accession into the European Union. Scientific Papers—Series Management Economic Engineering in Agriculture and Rural Development. 19(2), 197–202.

[51] Danna-Buitrago, J.P., Stellian, R., 2022. A new class of revealed comparative advantage indexes. Open Economies Review. 33, 477–503. DOI: https://doi.org/10.1007/s11079-021-09636-4

[52] Kang, M., 2018. Comparative advantage and strategic specialization. Review of International Economics. 26(1), 1–19. DOI: https://doi.org/10.1111/roie.12300

[53] Lafay, G., 1987. Avantage comparatif et compétitivité. Économie Prospective Internationale. 29, 39-52.

[54] Zaghini, A., 2003. Trade advantages and specialisation dynamics in acceding countries. European Central Bank: Frankfurt am Main. pp. 1–51.

[55] Siggel, E., 2006. International competitiveness and comparative advantage: A survey and a proposal for measurement. Journal of Industry, Competitiveness and Trade. 6, 137–159. DOI: https://doi.org/10.1007/s10842-006-8430-x

[56] Khai, N.X., Ismail, M.M., Sidique, S., 2016. Consistency tests of comparative advantage measures: An empirical evidence from the Malaysian and selected Asian shrimp products. International Food Research Journal. 23(6), 2752–2758.

[57] Maitah, M., Kuzmenko, E., Smutka, L., 2016. Real effective exchange rate of Rouble and competitiveness of Russian agrarian producers. Economies. 4(3), 12. DOI: https://doi.org/10.3390/economies4030012

[58] Benesova, I., Maitah, M., Smutka, L., et al., 2017. Perspectives of the Russian agricultural exports in terms of comparative advantage. Agricultural Economics—Zemedelska Ekonomika. 63(7), 318–330. DOI: https://doi.org/10.17221/344/2015-AGRICECON

[59] Pelli, M., Tschopp, J., 2017. Comparative advantage, capital destruction, and hurricanes. Journal of International Economics. 108, 315–337. DOI: https://doi.org/10.1016/j.jinteco.2017.07.004.

[60] Yercan, M., Isikli, E., 2009. Domestic resource cost approach for international competitiveness of Turkish horticultural products. African Journal of Agricultural Research. 9(4), 864–869.

[61] Hoang, T.M., Doan, T.N.T, Chen, J., 2016. Applying the DRC (domestic resource cost) index to evaluate the competitive advantage of Dak Lak coffee. Open Access Library Journal. 3, e2727. DOI: https://doi.org/10.4236/oalib.1102727

[62] Bruno, M., 1972. Domestic resource costs and effective protection: Clarification and synthesis. Journal of Political Economy. 80(1), 16–33. DOI: https://doi.org/10.1086/259858.

[63] Balassa, B., Schydlowsky, D., 1972. Domestic resource costs and effective protection once again. Journal of Political Economy. 80(1), 63–69. DOI: https://doi.org/10.1086/259861.

[64] Masters, W.A., Winter-Nelson, A., 1995. Measuring the comparative advantage of agricultural activities: Domestic resource costs and the social cost-benefit ratio. American Journal of Agricultural Economics. 77(2), 243–250. DOI: https://doi.org/10.2307/1243534.

[65] Amiti, M., 1998. New trade theories and industrial location in the EU. Oxford Review of Economic Policy. 14(2), 45–53. DOI: https://doi.org/10.1093/oxrep/14.2.45

[66] Chun, L., 2003. What is China’s comparative advantage? Chinese Economy. 36(2), 3–20. DOI: https://doi.org/10.1080/10971475.2003.11033463

[67] He, S., 2010. Dynamics of Chinese agricultural trade patterns. The Chinese Economy. 43(1), 5–25. DOI: http://dx.doi.org/10.2753/CES1097-1475430101

[68] Shuai, C., Wang, X., 2011. Comparative advantages and complementarity of the Sino-US agricultural trade: An empirical analysis. Agricultural Economics—Zemedelska Ekonomika. 57(3), 118–131. DOI: https://doi.org/10.17221/46/2010-AGRICECON

[69] Costinot, A., Donaldson, D., Komunjer, I., 2012. What goods do countries trade? A quantitative exploration of Ricardo’s ideas. Review of Economics Studies. 79, 581–608. DOI: http://doi.org/10.1093/restud/rdr033

[70] Alessandrini, M., Fattouh, B., Scaramozzino, P., 2007. The changing pattern of foreign trade specialization in Indian manufacturing. Oxford Review of Economic Policy. 23(2), 270–291. DOI: https://doi.org/10.1093/icb/grm013

[71] Gorton, M., Davidova, S., Ratinger, T., 2000. The competitiveness of agriculture in Bulgaria and the Czech Republic vis-à-vis the European Union (CEEC and EU agricultural competitiveness). Comparative Economic Studies. 42, 59–86. DOI: https://doi.org/10.1057/ces.2000.2

[72] Huang, J., Wei, W., Cui, Q, et al., 2017. The prospects for China’s food security and imports: Will China starve the world via imports? Journal of Integrative Agriculture. 16(12), 2933–2944. DOI: https://doi.org/10.1016/s2095-3119(17)61756-8

[73] Zhang, H., 2019. Securing the ‘rice bowl’: China and global food security. Palgrave Macmillan: London. pp. 1–304.

[74] Mukhopadhyay, K., Thomassin, P., Zhang, J., 2018. Food security in China at 2050: A global CGE exercise. Economic Structures, 7, 1. DOI: https://doi.org/10.1186/s40008-017-0097-4

[75] MGIMO University, 2024. Global food security and international agricultural trade in 2022/23. MGIMO University: Moscow. pp. 1–498.

[76] World Bank, 2018. China (and Russia) 2030—Implications for agriculture in Central Asia. World Bank: Washington, DC. pp. 1–79.

[77] Güneysu Atasoy, F., 2019. Analysis of household food consumption pattern: An application for China. Gümüşhane Üniversitesi Sosyal Bilimler Enstitüsü Elektronik Dergisi. 10(3), 473-483.

[78] Nogales, E.G., 2014. Making economic corridors work for the agricultural sector. FAO: Rome. pp. 1–204.

[79] Svanidze, M., Götz, L., Djuric, I., et al., 2019. Food security and the functioning of wheat markets in Eurasia: A comparative price transmission analysis for the countries of Central Asia and the South Caucasus. Food Security. 11, 733–752. DOI: https://doi.org/10.1007/s12571-019-00933-y

[80] Ada, E., Sezer, M.D., Kazancoglu, Y., et al., 2023. Towards the smart sustainable and circular food supply chains through digital technologies. International Journal of Mathematical, Engineering and Management Sciences. 8(3), 374–402. DOI: https://doi.org/10.33889/IJMEMS.2023.8.3.022

[81] Joshi, S., Sharma, M., Ekren, B., et al., 2023. Assessing supply chain innovations for building resilient food supply chains: An emerging economy perspective. Sustainability. 15(6), 4924. DOI: https://doi.org/10.3390/su15064924

[82] Nowak, A., Różańska-Boczula, M., 2022. The competitiveness of agriculture in EU member states according to the competitiveness pyramid model. Agriculture. 12(1), 28. DOI: https://doi.org/10.3390/agriculture12010028