How a country performs in different markets mostly indicates its product specialization. This holds particularly in the case of countries and regions with which the country trades most intensively. It is equally important in that respect how successful certain industries of that country are in the foreign markets, on the one hand, and on the other, how well they perform in their domestic market against their foreign competitors. Comparative advantages reflect country's performance in its inter-industry trade i.e. in foreign markets, while intensity of intra-industry trade indicates its performance both in exports and domestic markets. Differentiating between the two types of foreign trade – inter- and intra-industry trade – thus contribute to the insight into the level of the country’s and its individual industries’ competitive ability.
Recognizing that more than one third of foreign trade of Bosnia and Herzegovina(BiH) relates to the Western Balkans countries as well as the fact that two countries of that region are among its most significant trade partners, the research here focuses on analyzing BiH intra-regional trade. In order to assess the country's trade performance more fully, the paper analyzes both the inter-industry and intra-industry components of its trade with the region.
The research aims to discover patterns and variations in BiH intra-regional trade during the five-year time frame (2008-2012), with special regard to identifying industries with revealed comparative advantages and industries with dominancy of intra-industry trade.In addition to the simple trade indicators that reflect trade trends and structure, the research employs the concept of the so-called revealed comparative advantages (RCA) by using Balassa RCA index adjusted to application in regional and bilateral trade, while shares of IIT have been measured by using the standard uncorrected Grubel-Lloyd index. Trade performances of Bosnia and Herzegovina expressed by RCA and IIT indices have been investigated in 64 industries that registered exports and/or importswith the Western Balkans, defined as SITC rev. 4 divisions (two-digit level) out of total 67 at the given aggregation level.
The responses deriving from the analysis should indicate the convergence of Bosnia and Herzegovina economy with the region, and contribute to determining the level of country’s performance in regional trade relations
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07.03.2014.
REDETE 2014 - Researching Economic Development and Entrepreneurship in Transition Economies
