FORECAST THE REVEALED COMPARATIVE ADVANTAGE OF EXPORTING TECHNOLOGY INTENSIVE PRODUCTS FOR U.S., CHINA AND GERMANY
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In this paper, I calculate the RCA index for the three leading players in merchandise trade 2010: United States, China and Germany to measure and forecast their comparative advantage in exporting technology intensive products. I estimate and evaluate Holt’s exponential smoothing model and various ARIMA models, then choose the optimal model by minimizing BIC and RMSE to forecast the exports of technology intensive products and the total exports for U.S., China, Germany and the world. Then I calculate the forecasted RCA index based on values of the forecasted exports of technology intensive products and total exports. The results show that all the three countries have a comparative advantage in exporting technology intensive products and will keep holding the comparative advantage in the next 5 years. For China the advantage will continue increasing and exceed Germany in 2013, having the biggest comparative advantage in exporting technology intensive products.