Industrial competitiveness can be identified from the factors used to predict the performance of the export industry. Index of Revealed Comparative Advantage (RCA), is a measure of export performance that shows a comparison of commodities of a country’s market share compared with the average percentage of exports of the country in total world exports. RCA Index is an index to evaluate a country’s comparative advantage was first developed by Balassa in 1965. RCA index show specialization of a country commodity exports relative to exports of a commodity trading communities, such as world, regional, and so on. RCA formula is expressed as follows :
where X represents exports, i is a country, j is a commodity (or industry), n is the set of states, and t is the set of commodities (or industries). A country is said to have a comparative advantage in a commodity, if the RCA index value for that commodity more than 1, and if the RCA is less than 1 then the country has no comparative advantage (comparative disadvantage) in that commodity. In other words a country has a comparative advantage if the market share for the commodity exceeds the average percentage of exports of the country in total world exports.