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Abstract

The promotion of seafood processing industry, such as shrimp and tuna processing, is an effective way for developing countries to acquire foreign currency and to reduce rural poverty because it can lead to job creation. However, there is a question about whether rising wage rates might constrain further development. Thailand, for example, has already established a solid position in these industries, but the quantity of its exported frozen shrimp has peaked, and newly emerging countries such as Vietnam are following in its path. This paper tries to answer this question by applying an analysis based on the revealed comparative advantage (RCA). We compared RCA indexes for major exporters of processed shrimp, and found that the RCA of processed shrimp depended not only on the RCA of frozen shrimp but also on GDP per capita of the country which is an indicator of wage rates. A GDP per capita around US $2,700 could provide the maximum value for the RCA of processed shrimp, given the RCA of frozen shrimp. This finding implies that countries with a lot of brackish water and mangrove areas for shrimp farming can take a long term development strategy, starting with shrimp farming - frozen shrimp export in the initial stage of economic development and moving to the export of high- value processed shrimp when income levels reach to middle stages. With respect to the tuna canning industry, the shape of the comparative advantage - GDP per capita curve has one peak near the US $1,000 GDP per capita. Therefore, a strategy of developing the tuna canning industry would be recommended for countries that lack natural resources as is often seen in island countries.

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