Changing Pattern in the Comparative Advantage of Shrimp Culture in Asia and the Competitiveness in the Japanese Markets

Abstract

Promoting shrimp culture industry is one of the effective ways to earn foreign currencies and reduce rural poverty for developing countries. However, there is a question if rising wage rates might be a constraint for further development. Thailand, for example, has established a firm position in the industry, but its export of frozen shrimp has been decreasing and newly emerging countries such as Vietnam are following its path. This paper tries to answer this question by applying the analysis based on the revealed comparative advantage (RCA). We compared the RCA index for major exporters of frozen shrimp, and found that the trend of RCA of Thailand has declined since 1990, while that of Indonesia has been stable and that of Vietnam has been outstanding for the same period. This observation is consistent with the hypothesis that the wage rate is a key deterministic factor of the comparative advantage. What is the competitiveness of shrimp exported from major countries in the Japanese markets? Indeed, Thailand is losing its market share for frozen shrimp, but is expanding the export of high value processed shrimp. Vietnam realizes relatively high prices in spite of the low cost of production and its quality control is also gaining high reputation. Therefore, wage rate is one of the important factors shaping the changes in comparative advantage and competitiveness of shrimp culture, but the strategy of shrimp firms toward high quality and safety products is important too