The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. It is based on the Ricardian comparative advantage concept.
It most commonly refers to an index introduced by Béla Balassa (1965):
RCA = (Eij / Eit) / (Enj / Ent)
where:
| E | Exports |
| i | Country index |
| n | Set of countries |
| j | Commodity index |
| t | Set of commodities |
A comparative advantage is “revealed”, if RCA>1. If RCA is less than unity, the country is said to have a comparative disadvantage in the commodity or industry.