Review of Economics and Development Studies Vol.2, No 1, June 2016 29 Volume and Issues Obtainable at Center for Sustainability Research and Consultancy Review of Economics and Development Studies ISSN:2519-9692 ISSN (E): 2519-9706 Volume 2: Issue 1 June 2016 Journal homepage: www.publishing.globalcsrc.org/reads Measuring Inter-Industry Competitive Advantage and Performance of Lesotho’s Export Sector Macleans Mzumara Department of Economics, Bindura University of Science Education, P/Bag 1020, Bindura, Zimbabwe macmzumara@yahoo.com ARTICLE DETAILS ABSTRACT History Revised Format: May 2016 Available Online June 2016 The author investigated inter-industry competitive advantage and performance of Lesotho’s export sector. The results show competitiveness in Lesotho varies from one industry to the other. Textiles industry is the most competitive in Lesotho with 165 product lines which has revealed comparative advantage of equal or greater than 1. It is followed by miscellaneous industry with a demonstrated competitiveness in 35 product lines. The least competitive industries in Lesotho were found to be foot wear/head gear and wood and wood products both with only 4 product lines. The following industries in Lesotho performed badly and have no comparative advantage at all: animal and animal products; raw hides, skins leather and furs; plastic and rubber; chemical and allied industries; food stuffs; and mineral products. Although Lesotho has competitive advantage in textiles industry, it is also very vulnerable due to over-reliance on a single industry. There is a need to diversify through attracting foreign direct investment that will also usher in improvement in competitiveness across industries. © 2015 The authors, under a Creative Commons Attribution- NonCommercial 4.0 Keywords Comparative advantage, export performance, industrial export performance JEL Classification O19, F11, F13, F15 Corresponding author’s email address: macmzumara@yahoo.com Recommended citation: Mzumara, M. (2016). Measuring Inter-Industry Competitive Advantage and Performance of Lesotho’s Export Sector. Review of Economics and Development Studies, 2 (1) 29-54 DOI: https://doi.org/10.26710/reads.v2i1.131 1. Introduction Most of the studies which cover the export sector of a country have focused on competitive advantage or comparative advantage in products. A given country is said to have comparative advantage in so many products. There are fewer studies which have looked at inter-industry competitive advantage or comparative advantage. The objective of this paper is to measure inter-industry competitive advantage and performance of Lesotho’s export sector. The author’s motivation for this paper is based on the fact that Lesotho is a member of the Southern African Development Community (SADC). In this region countries of Southern Africa and the Indian Ocean are seeking deeper integration of their economies through increased intra-regional trade hence it is important studying competitive advantage or http://www.publishing.globalcsrc.org/reads mailto:macmzumara@yahoo.com mailto:macmzumara@yahoo.com https://doi.org/10.26710/reads.v2i1.131 Review of Economics and Development Studies Vol.2, No 1, June 2016 30 comparative advantage of Lesotho’s industrial structure. This paper begins by setting a hypothesis; Ho: There is no difference in the comparative advantage and performance of industries in Lesotho’s export sector. However, before the paper deals with the hypothesis, it is necessary to look at the literature on competitive advantage. 2. Literature on Competitive Advantage The President’s Commission on Industrial Competitiveness (1985) defines competitiveness as the degree a country is able to produce products and services in a free and fair condition in conformity with the international markets while increasing prosperity of its citizens. Harrison (1999) defines competitiveness as the ability of the country’s firms to produce a good or provide a service then promote it. The good meets high international standards but are sold at lower prices. According to Porter (1990, 2009) competitiveness is a product of a country’s human resource, physical capital e.g. factories and natural resources. In addition, competitiveness is determined by demand conditions as well as the performance of the firms and their strategies and most importantly how well prepared they are in relation to other competing firms. The paper will rely heavily on theories which are related to the principle of comparative advantage not with standing the fact that through out this paper, competitive advantage and comparative advantage are used interchangeably. The classical theory of comparative advantage points out that gains from exchange increases welfare and that free trade helps in making the world economy prosperous. Various theories linked to comparative advantage have emphasized different aspects which determine it. The Ricardian theory asserts that differences in costs and technological progress give respective countries comparative advantage. Heckscher-Ohlin-Samuelson theory attributes comparative advantage from factor price differential. The Neo-Factor-Proportion theory attributes comparative advantage of a country to arise from efficiency (productivity) of the factors. The technological gap and product cycle theory attributes comparative advantage to be influenced by technological innovations (Bender & Li, 2002). Some other authors such as Widgren (2005) and Mzumara (2006) have attributed comparative advantage from factor endowment. That means a country with an abundant factor will use that factor more intensively to produce products which it will export. Then it will import products which use its scarce factor less intensively. This analysis leads each country to specialization in the production of particular products. Khatibi (2008) attributes comparative advantage from factor scarcity. However, Widgren (2005) and Mzumara (2006) dispute Khatibi (2008) explanation which asserts that the relative scarcity would determine comparative advantage and contend that instead it will determine comparative disadvantage. There are different techniques or methods used to measure comparative advantage or competitive advantage. 2.1. Measures of Comparative Advantage Or Competitive Advantage One such measure that can be used to measure comparative advantage or competitive advantage is the Revealed Comparative Advantage (RCA). The RCA index is a useful technique which is used to measure comparative advantage. The measure utilizes observable trade balances and assists researchers to conclude the relative sectoral competitiveness of a particular and this is shown when the sector is able to produce efficiently (Ferto & Hubbard, 2000). RCA index measures a country’s competitiveness or comparative advantage and it is attained in a normal way such that it represents ratio of ratios which show relative trade shares (Richardson & Zhang, 2007). The RCA measure employs the trend of trade balances to show relative sectoral competiveness. Sectors which show international competitiveness are Review of Economics and Development Studies Vol.2, No 1, June 2016 31 those sectors which efficiently produce products for international markets. The sectors which import show lack of competitive advantage. The RCA is the most efficient and acceptable measure as it is not constrained by restrictive assumptions (Mutambatsere, 2007). Vollarth (1991) developed three alternative measures of the revealed comparative advantage. The first measure is known as relative trade advantage (RTA). It takes an account of both exports and imports. It is calculated as the difference between relative export advantage (RXA) equals to RCA index of Balassa corresponding to relative import advantage (RMA) and takes the form of: RTA = RXA – RMA where RXA = B (Balassa) and RMA = (mij/mit) / (mnj/mnt) Where mij representing imports in country I of product category of j mit representing imports of country I of set of commodities t Therefore RTA = [(Xij / Xit) / Xnj /Xnt)] - [(mij / mit) / (mnj / mnt)] Where Xij representing exports of country i of product category j Xit representing exports of country i of set of commodities t Xnj representing exports of set of countries, n of product category j Xnt representing exports of set of countries, n of set of commodities, t mij representing imports of country i of product category j mit representing imports of country i of set of commodities, t mnj representing imports of set of countries, n of product category j mnt representing imports of set of counties, n of set of commodities, t The second measure uses a logarithm of the RTA with In RXA to produce a third specification known as revealed competitiveness (RC) where RCA = In RXA –In RMA The advantage of showing the last two measures in logarithm is because of being asymmetric. Therefore Vollrath’s measure is positive and summarized as RTA, In RXA and RC. The last one as given above is a revealed comparative advantage or competitive advantage (Ferto & Hubbard, 2000). The difference between Balassa’s B and Vollarath’s RXA is that RXA eliminates country and product double-counting which is a weakness in Balassa’s index. The RXA takes an account all tradable products and all countries in place of subsets hence are more global (Ferto & Hubbard, 2000). Serin and Civan (2008) provide another technique besides the RCA. This method is known as Comparative Export Advantage (CEP) index. It is a modified Balassa’s technique. It is concerned with the measuring of export specialization of a country’s specific groups of products and uses the following formula: CEP = In (XiB / XB) / (XiA /XA) with XiB representing country B’s exports of good i XB representing B’s total exports XiA representing total world exports of good i XA representing total world exports of all goods Therefore an index value of B larger the index value of the country’s n shows relative comparative Review of Economics and Development Studies Vol.2, No 1, June 2016 32 advantage or competitive advantage of country B against n. Utkula and Seymen (2004) concluded that there are four different techniques which can be used to measure competitiveness. 2.2. Empirical Evidence of Measuring Competitive Advantage or Comparative Advantage Through Use of Balassa (1965) Revealed Comparative Advantage (RCA) Yeats (1997) applied RCA and concluded that Mercosur has no comparative advantage in the products it exports. The study also concluded that Mercosur’s own trade restrictions determine trade variations. Mirzaei et al (2004) found that Iran has no comparative advantage in eggs it exports to the Middle East region. Utkula and Seymen (2004) concluded there is a likelihood of negative trade creation effect for Turkey in the event of it joining the European Union. Trade diversion effects were not significant. Mutambatsere (2007) found that half of SADC member countries did not have comparative advantage in the production of maize (corn). Only Malawi, South Africa and Tanzania had a comparative advantage in the production of maize (corn). Shinyekwa and Othieno (2011) found that Uganda has comparative advantage in a very limited range of products. Mzumara (2011a) concluded that Zimbabwe has comparative advantage in the production of a wide range of products. Mzumara (2011b) found Mozambique to have comparative advantage in the production of 222 product lines. Mzumara (2012) found Botswana has comparative advantage in the production of 244 product lines. Mzumara et al (2012) found the USA to have comparative advantage in 1 791 product lines, Canada in 814 product lines and Mexico in 749 product lines. Jaravaza et al (2013) found Egypt to have comparative advantage in production of 733 product lines. Chingarande and Mzumara (2013) found South Africa to have comparative advantage in 824 product lines. 3. Methodology Of all the techniques so far available, this paper has opted for Balassa (1965) Revealed Comparative Advantage (RCA). The Balassa’s RCA remains valid in revealing true comparative advantage or competitive advantage (Deardorff, 2010). According to Wu and Chen (2004) Balassa’s method is very relevant and useful in a dynamic competitive market economy, competitive advantage or comparative advantage as shown in export composition is in line with competitive advantage or comparative advantage based on a country’s economy factor endowment and moves along with economic development. Balassa (1965) formula is as follows:                  totW toti jW ji X X X X RCA , , , , / With: Xi,j representing country i’s exports of product j; Xi,tot representing country i’s total exports; Xw,j representing the world’s (all countries) export of product j; and Xw,tot representing total exports in the world. An RCA ≥ 1 demonstrates that the country has comparative advantage or competitive advantage in the production of the product. An RCA < 1 demonstrates that the country has no comparative advantage or competitive advantage in the production of the product. Data used in this paper for Lesotho exports is a mirror data. Both Lesotho’s export data and the world’s export data was obtained from International Trade Centre (ITC)’s Trademap based in Geneva, Review of Economics and Development Studies Vol.2, No 1, June 2016 33 Switzerland. The data was obtained on 6-digit level which is the most acceptable disaggregated international classification of products. Individual RCAs were computed for 2008, 2009 and 2010 the most recent available data then average RCAs for the three year period were also computed. 4. Results and Discussion Results show textile industry/sector has 165 product lines with RCA ≥ 1. Table 1 shows product lines in textile the industry/sector in which Lesotho has competitive advantage or comparative advantage. Table 1: Product lines in the textile industry/sector in which Lesotho has competitive advantage or comparative advantage Industr y/sector code (50-63) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 55 550520 Waste of artificial fibre 1464.467 2325.365 2702.011 2133.948 51 510610 Yarn of carded wool >85% wool, not retail 533.737 818.9272 908.1849 753.6163 52 520535 Cotton yarn >85% multiple uncombed <125 dtex, not retail 780.232 257.6784 617.495 551.8018 53 530290 True hemp fibre otherwise processed but not spun 397.2242 542.1116 638.4631 525.933 61 610819 Women’s, girls’ slips or petticoats, material, knit 190.883 235.3972 518.2876 314.8577 51 510119 Greasy wool (other than shorn) not carded or combed 0 0 612.5891 204.1964 55 550969 Yarn of acrylic staple fibres, not retail 175.0726 174.9127 192.7222 180.9025 61 611239 Men’s, boys’ swimwear, of material knit 128.0305 170.9908 232.3506 177.124 61 610520 Men’s, boys’ shirts of man made fibres, knit 73.67956 188.2725 182.6666 148.2062 52 520849 Woven cotton >85% < 200g/m 2 , yarn dyed 106.1601 169.391 163.9257 146.4923 61 610343 Men’s, boys’ trousers, shorts, synthetic fibres, knit 131.2396 153.025 142.3001 142.1882 61 610463 Women’s, girls’ trousers, shorts, synthetic fibres, knit 176.0398 78.79117 150.948 135.2597 61 610899 Women’s, girls’ bathrobe, dressing 83.0856 138.8369 158.6428 126.8551 Review of Economics and Development Studies Vol.2, No 1, June 2016 34 gown knit 51 510320 Waste of wool or fine hair, not noils, garneted stock 110.4092 151.8258 113.0839 125.1063 55 551693 Woven fabric <85% artificial staples, yarn dyed 92.11932 142.535 137.3487 124.001 61 610462 Women’s, girls’ trousers and shorts of cotton, knit 121.39 125.8058 121.3955 122.8649 52 520299 Cotton, waste, except garneted stock 106.6071 133.0463 106.3782 115.3439 51 510510 Carded wool 97.31539 162.0626 73.76342 111.0471 60 600390 Knitted/crocheted fabrics of a width not >30cm (excluding of 60.1/60.02) 83.91641 137.3072 98.37145 106.5317 62 620342 Men’s, boys’ trousers and shorts, of cotton not knit 97.1616 88.92816 107.3416 97.81047 61 610510 Men’s, boys’ shirts of cotton, knit 85.17909 107.8858 92.97811 95.34766 61 611219 Tract suits, of materials, knit 61.08384 90.54383 109.6427 87.09011 52 520210 Cotton yarn waste (including thread waste) 63.45671 98.91448 94.52044 85.63454 55 551694 Woven fabric <85% artificial staples, printed 59.67601 100.3298 89.45057 83.15213 61 611020 Pullovers, cardigans etc of cotton knit 95.19815 69.58482 52.26291 72.34863 52 521142 Denim cotton <85% man made fibre, >200g/m 2 131.3136 79.37974 4.317854 71.6704 61 610590 Men’s, boys’ shirts of materials, knit 0.106841 0 211.682 70.59627 51 510539 Fine animal hair, carded/combed other than Kashmire (Cashmere) goats 67.43026 84.71719 56.45608 69.53451 62 621230 Corselettes and parts thereof 55.28547 71.29656 72.69754 66.42652 51 510620 Yarn of carded, wool, <85% wool not retail 57.86762 73.27546 66.4522 66.06155 62 620421 Women’s, girls’ ensembles, of wool or 42.80074 73.27546 80.68213 65.58611 Review of Economics and Development Studies Vol.2, No 1, June 2016 35 hair, not knit 62 6211141 Women’s girls’ garments of wool or hair, not knit 33.66652 61.16675 99.49069 64.77465 61 610120 Men’s, boys’ overcoats, etc, of cotton, knit 128.0404 61.42941 2.729685 64.00651 61 610422 Women’s girls’ ensembles, of cotton, not knit 40.25132 66.67885 81.21598 62.71538 61 610461 Women’s, girls’ trousers and shorts of wool hair, knit 51.64413 67.72307 64.29168 61.21962 62 620462 Women’s, girls’ trousers and shorts, of cotton, not knit 52.96912 60.06809 60.66753 57.90158 51 510310 Noils of wool or of fine animal hair 48.50851 63.48334 45.80478 52.9888 62 620920 Babies garments, accessories of cotton, not knit 30.07711 64.81527 60.42514 51.77251 61 610342 Men’s, boys’ trousers and shorts, of cotton, knit 68.34038 55.68044 25.34565 49.7882 55 551349 Woven fabric >85% synth + cotton, <170g/m 2 printed 56.01616 52.82097 36.84347 48.5602 61 611030 Pullovers, cardigans etc of man made fibres, knit 41.33047 39.17372 40.15073 40.21831 61 610341 Men’s, boys’ trousers and shorts, of wool or hair knit 33.51238 43.48924 43.13545 40.04466 58 580220 Terry toweling etc, other than cotton, width >30cm 23.75572 46.48924 43.8259 38.02362 62 620322 Men’s, boys’ ensembles of cotton, not knit 29.76307 39.61805 41.43812 36.93975 62 620463 Women’s girls’ trousers, shorts synth fibres, not knit 31.73006 60.42478 18.07077 36.74187 61 610892 Women/girl bathrobe, dressing gown, knit 0.609107 15.85642 90.53367 35.6664 55 551692 Woven fabric <85% artificial staples, dyed 26.1818 38.79565 37.39912 34.12552 52 520511 Cotton yarn >85% 11.95128 14.87016 70.62404 32.48183 Review of Economics and Development Studies Vol.2, No 1, June 2016 36 single uncombed >714 dtex, not retail 52 520942 Denim cotton >85% >200g/m 2 48.90419 43.50275 3.385687 31.93089 61 610220 Women’s girls’ overcoats, etc, of cotton knit 24.57083 15.80824 55.07846 31.81918 55 550962 Yarn of acrylic staple fibres and cotton, not retail 24.59257 37.16611 32.87998 31.54622 52 520546 Combed multi cotton yarn 22.00338 30.38637 40.69214 31.0273 63 630399 Curtains drapes blinds valances, material, woven 25.38042 33.36231 33.61443 30.78572 61 610429 Women’s, girls’ ensembles, of material, knit 21.86591 29.41051 34.4344 28.82511 61 611231 Men’s, boys’ swimwear, synthetic fibres, knit 25.34188 29.09542 29.29538 27.91089 61 610610 Women’s, girls’ blouses and shirts, of cotton, knit 23.44408 28.03742 29.745 27.0755 55 550961 Yarn of crylic staple fibre and wool or hair, not retail 22.11471 28.87356 29.52269 26.83699 51 510810 Yarn of carded fine animal hair, not retail 21.07172 29.25598 28.51461 26.28077 58 580219 Terry toweling etc of cotton, width >30cm 20.86443 27.84668 28.59666 25.76925 62 620433 Women’s, girls’ jackets, blazers, synth fibres not knit 25.50569 39.03295 12.26246 25.60037 52 520544 Cotton yarn >85% multiple combed 192- 125 dtex, not retail 20.71369 25.94873 30.07281 25.57841 61 610839 Women’s, girls’ nightdress pajamas, material, knit 12.77806 31.65805 31.72128 25.3858 61 610230 Women’s, girls’ overcoats etc, man made fibres, knit 24.63584 19.80344 18.50479 20.98202 61 611130 Babies garments accessories of synthetic fibres, knit 10.896 22.01322 28.29929 20.40309 62 621111 Men’s, boys’ 16.33789 20.64028 22.4498 19.80933 Review of Economics and Development Studies Vol.2, No 1, June 2016 37 swimwear, not knit 61 611430 Garments, of man made fibres, knit 15.93504 19.04164 21.61134 18.86267 63 630520 Sacks ad bags packing, of cotton 16.99609 19.80852 19.54253 18.78238 61 610441 Women’s, girls’ dresses, of wool or hair, knit 15.59159 17.73089 21.5792 18.30054 61 611420 Garments of cotton, knit 17.72045 23.58389 12.94247 18.08227 55 551441 Woven plain >85% polyester + cotton >170g/m 2 printed 13.99475 19.86386 20.13246 17.99703 61 610712 Men’s boys’ underpants or briefs man made fibre, knit 16.17099 22.994 10.43541 16.53347 55 551599 Woven fabrics synthetic staple fibres 0 49.17599 0 16.392 61 610620 Women’s girls’ blouses and skirts man made fibre, knit 8.050406 19.63091 19.84327 15.84153 61 610990 T-shirts, singles etc, of material, knit 13.43723 6.97613 24.04663 14.82 62 620422 Women’s, girls’ ensembles, of cotton not knit 9.561238 13.75509 19.41249 14.24294 62 620423 Women’s, girls’ ensembles, synthetic fibre, not knit 10.2366 14.7121 16.86091 13.93654 61 610331 Men’s, boys’ jackets and blazers, wool or hair, knit 11.81921 13.87565 12.4746 12.72299 62 620411 Women’s girls’ suits of wool or hair not knit 7.54242 11.35605 19.06406 12.65418 62 621112 Ski suits of textile material not knit 8.539567 12.55326 16.28847 12.46043 61 610910 T-shirt, singlets and other vests, of cotton, knit 12.74531 12.03828 11.53178 12.10512 61 610719 Men’s, boys’ underpants or briefs, material, knit 8.791444 12.7748 14.54471 12.03698 63 630259 Table linen of material not knit 8.465237 13.87353 13.1709 11.83656 61 610829 Women’s, girls’ briefs or panties, material 10.02862 12.25481 12.0846 11.45601 Review of Economics and Development Studies Vol.2, No 1, June 2016 38 knit 52 520548 Combed mult cotton yarn 9.122074 14.99771 10.00824 11.25494 61 610453 Women’s girls’ skirts, synthetic fibres, knit 0 20.42306 13.34175 11.2463 63 630240 Table linen of textile knit or crochet materials 7.228115 11.84031 12.18274 10.41706 61 610452 Women’s, girls’ skirts, of cotton, knit 17.17936 6.172972 6.866861 10.07306 61 610130 Men’s, boys overcoats, etc, of man made fibres, knit 22.81537 1.620441 3.254108 9.229973 61 611190 Babies garments accessories of material, knit 6.243435 8.572633 11.07713 8.631066 61 611120 Babies garments, accessories of cotton knit 10.76046 10.51876 4.439947 8.5733055 61 611691 Gloves, mittens or mitts of wool or hair, knit 8.673206 9.701713 7.331941 8.568953 52 521225 Woven cotton fabric > 200g/m 2 printed 6.801946 9.622003 8.750985 8.391645 61 610451 Women’s, girls, skirts, of wool or hair knit 6.549044 8.160077 10.18207 8.297063 52 521211 Woven cotton fabric c>200g/m 2 unbleached 7.932312 8.723681 7.062127 7.90604 63 630299 Toilet or kitchen linen of material 7.057022 8.454543 7.904649 7.805405 62 620721 Men’s boys’ nightshirts or pajamas, cotton, not knit 5.804854 8.738759 8.4412 7.661604 61 611241 Women’s, girls’ swimwear, synthetic fibres knit 6.374205 7.485492 8.103202 7.320966 61 610322 Men’s, boys ensembles of cotton knit 4.462305 8.076765 8.736708 7.091926 58 580610 Slag wool, rock wool, similar wools, bulks sheet, roll 6.515055 7.310545 6.895576 6.907059 52 521049 Woven cotton <85% + man made fibre <200g yarn dyed 5.189941 7.322063 8.198862 6.903622 62 620640 Women’s, girls’ blouses, shirts, man 0.897239 0.924248 18.22402 6.681837 Review of Economics and Development Studies Vol.2, No 1, June 2016 39 made fibre, not knit 54 540249 Yarn synth filament, single untwisted, not retail 5.590221 7.968349 6.147948 6.568839 54 540834 Woven fabric of artificial filament printed 4.959592 6.084889 8.241751 6.428744 55 551443 Woven>85% polyester + cotton >170g/m 2 printed 5.974839 6.939034 6.01594 6.309937 52 520512 Cotton yarn >85% single uncombed 714- 232 dtex not retail 1.919628 1.103449 15.88846 6.303846 63 631010 Used or new rags textile material sorted 5.308897 6.772853 6.395625 6.159125 54 540269 Yarn synthetic filament, multiple, not retail 5.506243 6.837043 5.492612 5.945299 52 520623 Cotton yarn <85% singled combed 232- 192 dtex, not retail 0 0 17.74738 5.915793 52 520521 Cotton, yarn >85% single combe >714 dtex, not retail 2.865638 4.952065 9.590424 5.802709 51 510710 Yarn of combed wool >85% wool not retail 4.18376 6.053752 5.450682 5.229398 62 620829 Women’s, girls’ nightdress, pajamas, material, knit 3.800378 4.419079 7.419924 5.213127 61 610332 Men’s, boys’ jackets and blazers cotton, knit 4.771324 5.439659 4.990702 5.067228 62 620821 Women’s, girls nightdress pajamas of cotton, not knit 4.305418 5.174277 5.428198 4.969298 65 650510 Hair-nets of any material 4.013114 5.165106 4.653781 4.610667 53 530911 Woven fabric >85% flax, unbleached or bleached 3.76202 5.316414 4.670599 4.583029 58 580134 Woven warp pile fabric man made fibre, epingle (uncut) 2.154199 3.518066 8.016365 4.562877 55 550510 Waste of synthetic fibres 3.377678 5.531777 4.669265 4.58624 52 520100 Cotton, not carded or combed 0 0 13.5567 4.578901 Review of Economics and Development Studies Vol.2, No 1, June 2016 40 55 550941 Yarn >85% other synth staple fibres, single not retail 4.095134 5.089077 4.12678 4.43683 52 520959 Woven cotton >85% >200g/m 2 , printed 3.413652 4.701848 4.915476 4.343659 61 610190 Men’s, boys overcoats, etc of material knit 2.617608 3.689572 6.314393 4.207191 62 620811 Women’s, girls slips etc, of man made fibres, not knit 2.838227 3.998438 5.053845 3.963503 63 630291 Toilet or kitchen linen, cotton 3.310788 4.430793 3.971644 3.904408 62 620799 Men’s, boys dressing gowns, material, not knit 3.316105 3.681299 3.84774 3.615059 52 520819 Woven cotton >85%<200g/m 2 unbleached 3.447162 3.723765 3.427338 3.532755 62 621220 Girdles pantry girdles and parts thereof 3.051308 3.627321 3.158141 3.278923 62 621590 Ties, bow ties and cravats, material, not knit 2.956377 3.765672 3.054287 3.258779 55 551299 Woven fabric >85% synthetic staple fibre 2.608476 3.765219 3.30824 3.227312 61 611212 Track suits, synthetic fibre 0 0 9.434925 3.144975 61 611699 Gloves, mittens or mitts, material, knit 2.787531 3.288573 2.875993 2.984366 63 630239 Bed linen, of material 2.75744 3.171853 3.013543 2.980945 52 520821 Plain weave cotton >85%<100g/m 2 , bleached 2.639912 2.917569 2.462884 2.673455 62 620711 Men’s boys underpants or briefs, of cotton, not knit 2.089433 2.618508 2.80634 2.50476 63 630800 Set, woven fabric and yarn for rugs, tapestry 1.996284 2.650166 2.671625 2.439358 50 500790 Woven fabric of silk 1.780914 2.798224 2.482207 2.353735 61 610290 Woven fabric of silk 1.570685 2.146557 3.165733 2.94335 62 620333 Men’s, boys’ jackets, blazers, synthetic fibre, not knit 3.693293 2.697967 0.345002 2.245421 57 570231 Carpets of wool or hair, woven pile, not made up 0 6.34895 0 2.116317 Review of Economics and Development Studies Vol.2, No 1, June 2016 41 52 520645 Cotton yarn <85% multiple combed <125 dtex, not retail 1.652396 2.107908 2.222857 1.994397 61 610419 Women’s, girls suit of material, knit 1.689344 1.756386 2.43192 1.959217 62 620111 Men’s, boys overcoats 1.698081 2.089259 1.929337 1.905559 63 630251 Table linen, of cotton, not knit 1.802046 2.33611 1.420144 1.852767 50 500600 Silk yarn retail, silk worm gut 1.366236 1.933218 1.818344 1.705932 63 630391 Curtains drapes blinds valances, cotton, not knit 1.49668 1.896782 1.634189 1.67588 54 540262 Yarn of polyester filament, multiple, not retail 0.777385 2.233404 1.775101 1.595297 61 610821 Women’s, girls briefs or panties, of cotton, knit 1.417177 1.7519 1.577782 1.582286 62 621149 Women’s, girls garments, material, not knit 1.238884 1.703938 1.687582 1.543468 62 620452 Women’s, girls’ skirts of cotton, not knit 0.250618 4.323281 0.14005 1.529301 61 610791 Men’s, boys’ bathrobes, dressing, gowns etc, cotton knit 0 0 4.486764 1.495588 62 621440 Shawls, scarves etc of artificial fibres, not knit 1.854853 1.593605 0.943997 1.4641522 61 611599 Hosiery of material knit 1.200357 1.535907 1.534356 1.430207 62 620343 Men’s boys trousers, shorts synthetic fibre, not knit 1.221196 0.985337 1.834295 1.346943 62 621410 Shawls, scarven, etc, of silk etc, not knit 1.231224 1.374072 1.405842 1.337046 60 600542 Warp knit fabrics including those made on gallon machines 1.236335 1.34116 1.369447 1.315647 61 611019 Jerseys, pullovers, cardigans, waist coats and similar articles, knitted or crochet 2.683121 1.145211 0 1.276111 61 610442 Women’s, girls’ dresses, of cotton, knit 0.33087 0 3.135929 1.1556 61 611300 Garments of knit or 0 2.047437 1.388476 1.145305 Review of Economics and Development Studies Vol.2, No 1, June 2016 42 crochet impregnated fabric 63 630499 Furnishing goods, material 0.995798 1.153073 1.224039 1.124303 52 520522 Cotton yarn >85% single combed 714- 232 dtex not retail 0 0 3.142894 1.047631 62 620469 Women’s, girls’ trousers, shorts, material, not knit 1.680786 1.334756 0.069234 1.028259 62 621139 Men’s, boys’ garments, material, not knit 0 0 3.070753 1.023584 60 600610 Knitted/crocheted fabrics in ch.60, wool/fine animal hair 0.884876 1.135021 1.006949 1.008949 59 590691 Rubberized textile knit or crochet fabric 0.872887 1.150423 0.981644 1.001651 63 630510 Sacks and bags, packing of jute or other bast fibres 0.828017 0.805569 1.368526 1.000704 51 511290 Woven fabric, combed wool or hair with natural fibre 0.664068 1.098372 1.239302 1.000581 Source: Computed using the data obtained from Trademap (2013) Waste of artificial fibre in table 1 has the highest RCA index of 2163.9. It is followed by yarn of carded wool >85% wool with RCA index of 753.6. In the third place is cotton yarn >85% multiple uncombed with RCA index of 551.8. It is followed by hemp fibre with RCA index of 525.9. The fifth place is occupied by women’s, girls’ slips or petticoats material, knit with RCA index of 314.9. They are followed by greasy wool not carded or combed with RCA index of 204.2. In the seventh position is yarn of acrylic staple fibres, not retail with RCA index of 177. On the ninth place are men’s, boys’ shirts of man made fibres, knit with RCA index of 148. They were followed by woven cotton, >85% <200g/m 2 yarn dyed with RCA index of 146.5. Miscellaneous industry/sector has 35 product lines with RCA ≥ 1. Table 2 shows product lines in miscellaneous industry/sector in which Lesotho has competitive advantage or comparative advantage. Table 2: Product lines in the miscellaneous industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (90-97) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 91 911430 Clock or watch dials 734.9591 1114.696 990.0328 9.46.5625 91 911390 Watch straps etc and parts, of leather/plastic 264.4864 385.4482 388.5527 346.1624 Review of Economics and Development Studies Vol.2, No 1, June 2016 43 etc 93 930119 Artillery weapons (eg guns, howitzers and mortars) other than self – propelled 552.6757 278.1989 181.7531 337.5426 91 911090 Clock movements, unpartly assembled rough 235.2498 307.2225 383.0574 308.5099 95 950790 Fishing and hunting equipment and requisites 89.93768 107.7656 105.7204 101.1412 90 901850 Ophthalmic instruments and appliances 14.84938 17.32502 16.55449 16.53347 91 910299 Pocket-watch, base-metal case, non-battery 12.82605 16.26663 12.08797 13.72688 96 960329 Shaving, hair, nail, eyelash and other toilet brushes 8.584942 11.1127 9.976256 9.891298 96 961310 Pocket lighters, gas-fueled, non- refillable 9.058878 9.98637 9.975211 9.673642 90 901050 Appliances and equipment for ph labour 4.868285 11.74672 11.30239 9.305797 93 930320 Shotguns, shotgun-rifles for sport, hunting or target 25.1559 0 0 8.385299 91 910199 Pocket-watch, precious-metal case, non- battery 7.920239 7.949009 7.268501 7.712583 90 900140 Spectacle lenses of glass 6.07728 6.473324 8.383734 6.978113 91 911190 Polysulphides, polysulpones etc in primary form 4.140181 6.538599 7.32294 6.000573 90 901010 Equipment for automatic development of 4.305983 6.340591 6.83973 5.828768 Review of Economics and Development Studies Vol.2, No 1, June 2016 44 photo film 95 950730 Fishing reels 5.230046 6.259287 5.813091 5.767475 96 960500 Travel sets toilet sewing, shoe, clothes cleaning 3.599232 5.027583 5.838611 4.821809 92 920190 Harpsichords, keyboard stringed instruments 3.871247 4.200821 3.08264 3.718236 91 910119 Wristwatch, precious metal, battery, other 4.043156 3.6117 3.158119 3.604148 96 960400 Hand sieves and hand riddles 2.916279 4.059327 3.741066 3.572224 91 910911 Clock movements, complete and assembled, battery/alarm 2.058481 2.909939 5.120567 3.363002 90 901090 Parts and accessories for photo laboratory equipment 1.543122 3.184484 2.830542 2.519383 93 930111 Artillery weapons (e.g guns, howitzers and mortars) self-propelled 1.181125 3.463022 2.145511 2.473261 90 900630 Cameras for special use under water aerial 1.603093 2.031063 1.92483 1.806761 94 940421 Mattresses of cellular rubber or plastic 1.648429 1.941745 1.871641 1.820605 90 903010 Instruments to measure or detect ionizing radiations 1.714622 1.78084 192482 1.806761 95 950629 Water-skis surf- boards, other water sport equipment 1.538136 1.923861 1.927407 1.796468 90 900820 Microfilm, microfiche or other microform 1.379415 1.549031 2.45596 1.794802 91 910519 Alarm clocks, 1.175507 1.585993 1.72718 1.496227 Review of Economics and Development Studies Vol.2, No 1, June 2016 45 non-electric 91 910990 Clock movements, complete and assembled, non- battery 1.426464 1.273039 1.024235 1.241246 90 900791 Parts and accessories for cinematographic cameras 1.009167 1.438201 1.232092 1.226487 91 901813 Magnetic resonance imagi 1.27743 1.207462 1.060425 1.131877 91 910529 Wall clocks, non-electric 0.977544 1.133073 1.224039 1.124303 90 902221 Medical apparatus using alpha, beta or gamma radiation 0.936459 1.275208 1.15412 1.121929 91 910191 Pocket-watch, precious-metal case battery 1.050428 1.165088 0.881321 1.032279 Source: Computed using the data obtained from Trademap (2013). In table 2 above, clock or watch dials have the highest RCA index of 946.6. They are followed by watch straps and parts of leather which have RCA index of 346. In the third place is artillery weapons which are not self propelled have RCA index of 337.5. They are followed by clock movements partly or not partly assembled, rough clocks with RCA index of 308.5. In the fifth position is fishing with RCA index of 101. They are followed by ophthalmic instruments and appliances with RCA index of 16.5. Metals industry/sector has 23 product lines with RCA ≥ 1. Table 3 shows product lines in metals industry/sector in which Lesotho has competitive advantage or comparative advantage. Table 3: Product lines in the metals industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (72-83) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 73 730690 Tube/pipe/hollow profile, iron/steel, riveted/open sea 122.6441 163.7072 181.4434 155.9317 72 720410 Waste or scrap of cast iron 77.61197 148.7294 118.5789 114.9734 72 721011 Flat rolled iron or non alloy steel, coated with tin, w>600mm, t>0.5m 17.30758 30.19138 24.06931 23.85609 72 720430 Waste or scrap, of 14.63584 29.88272 21.41376 21.77074 Review of Economics and Development Studies Vol.2, No 1, June 2016 46 tinned iron or steel 72 720429 Waste or scrap, of alloy steel, other than stainless 10.32905 16.53893 14.53644 13.80148 79 790310 Zinc dust 8.933945 14.71855 10.08642 11.2463 72 721260 Flat rolled iron or non-alloy steel, width <600m, clad 8.255892 14.30606 10.5693 11.04375 76 761511 Pots sourers, aluminum 5.517398 10.35718 8.662797 8.112458 73 732429 Baths, iron or steel, except cast iron 5.927178 8.148817 8.384625 7.486873 72 721699 Angles shps sec nfw worked 2.422386 5.358355 6.378371 4.719704 73 731300 Wire for fencing, including barbed wire 3.377334 4.416347 5.23692 4.343533 76 761520 Aluminium sanitary ware, parts threof 3.130298 4.467224 4.88606 4.161194 72 721310 Hot rolled bar/rod grooved iron or non-alloy steel in irregular coils 2.66264 5.235812 4.429775 4.109411 73 731290 Plaited bands/etc, iron, steel, no electric insulation 2.913953 4.332744 4.548398 3.931698 74 741820 Sanitary ware and parts thereof of copper 2.630063 3.933839 3.393026 3.363002 82 821591 Cutlery not in sets, plated with precious metal 1.655336 2.774786 2.37287 2.267664 73 730590 Tube/pipes iron/steel riveted etc, diameter >406.4m 1.635459 2.269522 2.143444 2.016142 74 740400 Copper/copper alloy waste or scrap 1.655615 2.545029 1.559924 1.920189 74 740929 Plate/sheet/strip, copper-zinc alloy, flat, t>0.15m 1.350022 2.143403 1.546832 1.680086 Review of Economics and Development Studies Vol.2, No 1, June 2016 47 73 731450 Expanded metal, iron or non-alloy steel <3mm wire <100cm mesh 1.146067 1.774065 1.744617 1.554916 73 731439 Grill, netting, fencing 0.770374 1.134448 1.228664 1.044495 82 821195 Handles for knives 4.714329 8.639433 8.498724 7.284162 82 820140 Axes bill hooks and similar brewing tools 6.5495 7.862517 6.964475 7.125597 Source: Computed using the data obtained from Trademap (2013). Tube/pipe/hollow profile, iron/steel, riveted/open sea in table 3 has the highest RCA index of 155.9. It is followed by waste or scrap of cast iron with RCA index of 115. In the third place is flat rolled iron or non alloy steel, coated with tin, width >600mm, t>0.5 with RCA index of 23.9. This is followed by waste or scrap of tinned iron or steel with RCA index of 21.8. In the fifth place is waste or scrap of alloy steel, other than stainless with RCA index of 13.8. Stone/glass industry/sector has 14 product lines with RCA≥1. Table 4 shows product lines in stone/glass industry/sector in which Lesotho has competitive advantage or comparative advantage. Table 4: Product lines in the stone/glass industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (68-71) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 71 710231 Diamonds (jewellery) unworked or simply sawn, cleaved 202.9787 187.442 179.6041 190.009 71 711419 Gold/silver smith wares of/clad with precious metal 119.3753 38.28053 29.85239 62.50274 71 711320 Jewellery, parts, base metal clad with precious metal 35.06134 21.97244 29.44157 28.82511 71 710210 Diamonds, unsorted 46.2564 0 0 15.4188 69 690810 Glazed 13.48528 13.35935 16.14197 14.32886 Review of Economics and Development Studies Vol.2, No 1, June 2016 48 ceramic mosaic tiles <7cm wide 71 711291 Waste and scrap of gold including metal clad with gold but excluding sweepings 11.70539 14.91212 12.41408 13.01053 71 710229 Diamonds industrial, worked 12.38463 11.79051 14.36107 12.8454 71 711230 Ash containing precious, semi- precious metal comps 7.446278 18.71947 9.169246 11.97833 71 711620 Articles of precious, semi- precious, artificial stone 7.151341 7.302498 7.265545 7.239795 69 690710 Unglazed ceramic mosaic tiles <7cm wide 5.121887 6.708235 5.435306 5.755143 71 711810 Coin (other than gold coin) not being legal tender 17.14601 0 0 5.715336 69 690600 Ceramic pipes, conduits, guttering and fittings 2.038496 2.877976 3.285055 2.733842 69 691190 Household and toilet articles of porcelain 0 0 3.297099 1.099033 69 691090 Ceramic bath room 0.783745 1.149111 1.101472 1.011443 Review of Economics and Development Studies Vol.2, No 1, June 2016 49 kitchen sanitary items not porcelain Source: Computed using the data obtained from Trademap (2013). Diamonds (jewellery) unworked or simply sawn, cleaved have the highest RCA index of 190 in table 4. They are followed by gold/silver smith wares of clad with precious metal with RCA index of 62.5. In third place is jewellery, parts, base metal clad with precious metal with RCA index of 28.8. They are followed by diamonds, unsorted with RCA index of 15. Transportation industry/sector has 6 product lines with RCA ≥ 1. Table 5 shows product lines in transportation industry/sector in which Lesotho has competitive and comparative advantage Table 5: Product lines in transportation industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (86-89) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 88 880211 Helicopters of unladen weight <2, 000 kg 27.77482 47.14019 61.1992 45.3714 88 880400 Parachutes, parts and accessories 39.54833 44.93342 45.17364 43.21846 88 880220 Fixed wing aircraft, unladen weight <2000kg 4.258103 11.64982 10.87832 8.928748 89 890790 Buoys, beacons, coffer-dams pontoons, floats 7.530137 8.93927 9.519306 8.662904 89 890399 Rowing boats, canoes pleasure boats except sail/powered 1.347047 2.345301 2.171187 1.954512 87 871500 Baby carriages and parts thereof 1.271808 1.720653 1.599467 1.530643 Source: Computed using the data obtained from Trademap (2013). Helicopters of an unladen weight <2 000 kg in table 5 have the highest RCA of 45. They are followed Review of Economics and Development Studies Vol.2, No 1, June 2016 50 by parachutes, parts and accessories thereof with RCA of 43. In third place is fixed wing aircraft, unladen weight < 2000kg with RCA index of 8.9. Vegetable products industry/sector has 5 product lines with ≥ 1. Table 6 shows product lines in vegetable products industry/sector in which Lesotho has competitive or comparative advantage. Table 6: Product lines in vegetable industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (06-15) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 11 110313 Maize (corn) groats or meal 16.67905 19.84502 17.55048 18.02485 14 140490 Vegetable products 6.55742 9.858852 4.378384 6.93154 07 071120 Olives, provisionally preserved 9.166686 0 0 3.055529 11 110220 Maize (corn) flour 0 7.780081 0 2.59336 08 081340 Fruits, dried 0 3.047325 3.133786 2.06037 Source: Computed using the data obtained from Trademap (2013). Maize (corn) groats or meal in table 6 has the highest RCA index of 18. It is followed by vegetables products with RCA index of 6.9. Wood and wood products industry/sector has 4 product lines with ≥ 1. Table 7 shows product lines in wood and wood products industry/sector in which Lesotho has competitive or comparative advantage. Table 7: Product lines in wood and wood products industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (44-49) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 48 481720 Letter or correspondence cards, plain post cards 102.2355 128.411 106.5051 112.3839 48 482090 Office supplies of paper, book covers, blotters 8.818591 10.70641 12.09913 10.54137 48 481930 Sacks and bags of paper, having a width>40 cm 4.051041 5.378536 5.136341 4.855306 49 490210 Newspapers, journals and periodicals >3 issue/week 1.114916 1.56969 1.702344 1.462317 Review of Economics and Development Studies Vol.2, No 1, June 2016 51 Source: Computed using the data obtained from Trademap (2013). Letter or correspondence cards have RCA index of 112 in table 7. They are followed by sacks and bags of paper with width of >740cm with RCA index of 4.9. Footwear/head gear industry/sector has 4 product lines with RCA≥1. Table 8 shows product lines in foot wear/head gear industry/sector in which Lesotho has competitive and comparative advantage. Table 8: Product lines in foot wear/head gear industry/sector in which Lesotho has competitive advantage or comparative advantage Industry/sector code (64-67) Product code Product description 2008 RCA 2009 RCA 2010 RCA Average RCA 64 640320 Foot wear soles/uppers leather, strap instep and big 3.083797 5.024603 8.896674 5.668358 64 640220 Foot wear, rubber, plastic, straps fix to sole by plug 2.103646 2.4147 1.760477 2.092941 65 650700 Parts of hats and head gear 1.304664 1.344966 1.86321 1.27865 65 650699 Head gear of other materials 0.99013 1.346112 1.216011 1.184056 Source: Computed using the data obtained from Trademap (2013). Foot wear, soles/uppers leather, strap instep and big have the highest RCA index of 5.7 in table 8. The results also show that there were no products with RCA≥ 1 in the following industries/sectors: animal and animal products; raw hides’ skins leather and furs; plastic and rubber; chemicals and allied industries; food stuffs; and mineral products. This shows Lesotho is not competitive in these industries. The results although are based on industries are consistent with the results of empirical evidence discussed in the literature review. The empirical evidences were based on product lines rather than inter-industry competiveness. However, to arrive at inter-industry competiveness RCAs for product lines were computed then categorized in their respective industries. These results are therefore consistent with reported empirical evidence. Comparison of Inter-Industry Competitive Advantage In figure 1 below, shows comparison of inter-industry competitive advantage in Lesotho. Figure 1: Comparison of inter-industry competitive advantage in Lesotho Review of Economics and Development Studies Vol.2, No 1, June 2016 52 In Figure 1 above, textile is the most competitive industry/sector in Lesotho with 165 product lines in which it has RCA≥ 1. Mostly are manufactured clothing. Miscellaneous is the second competitive industry/sector with 35 product lines. It is followed by metals which has 23 product lines with RCA≥1. In the fourth place is stone/glass with 14 product lines demonstrating competitive advantage. It is followed by transportation industry/sector with 8 product lines in which it has competitive advantage. The sixth place is occupied by vegetable products industry/sector with 5 product lines in which it has competitive advantage. They are followed by wood and wood products and foot wear/head gear industries/sectors each have 4 product lines in which they are competitive. 5. Results and Hypothesis The null hypothesis set in this paper is restated here; There is no difference in the competitive advantage and performance of industries in Lesotho’s export sector. Based on the results reported above and their analysis, the above null hypothesis is rejected and that the alternative hypothesis that there is a difference in the competitive advantage and performance of industries in Lesotho’s export sector is true. Conclusions And Recommendations Textiles ; 165 Miscellaneous ; 35 Metals ; 23 Stone/Glass ; 14 Transportation ; 8 Vegetable Products ; 5 Wood & Wood Products ; 4 Foot wear/head gear ; 4 Textiles Miscellaneous Metals Stone/Glass Transportation Vegetable Products Wood & Wood Products Foot wear/head gear Review of Economics and Development Studies Vol.2, No 1, June 2016 53 The paper concludes that there is evidence that competiveness in Lesotho vary from Industry to the other. Textile industry is the most competitive of all industries in Lesotho. The second most competitive industry is miscellaneous. The least competitive industries in Lesotho are wood and wood products and foot wear/head gear. The following industries clearly demonstrate lack of competitive advantage and have performed poorly in international trade: animal and animal products; raw hides, skins leather and furs, plastic and rubber; chemical and allied industries; food stuffs and mineral products. Competitiveness is very much concentrated in one industry mainly textile. Lesotho is therefore very vulnerable due to over-reliance in a single industry. Any disturbance in this industry would result in significant drop in exports for Lesotho and its productivity. There are also a very limited number of products in all industries in which Lesotho has competitive advantage except textile industry. Textile industry is labor intensive hence such labor is readily available in Lesotho. The conclusions as stated above demonstrate the need for Lesotho to diversify its economy in order to improve on competitive advantage. Lesotho should endeavor to attract foreign direct investment (FDI). If Lesotho succeeds in attracting FDI, it will improve its competitiveness through infusion of technology as well as superior management skills. It is further recommended that Lesotho should attract international firms which outsource from countries such as Pakistan and Bangladesh to boost its textile industry further as the country has demonstrated it has competitive advantage in the textiles industry. These chances of attracting the firms can be enhanced through offering them incentives to entice them locate to Lesotho. FDI should not be restricted to textiles industry only but to other industries as well especially the ones with very little competitiveness or no competitiveness at all. 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