Specialization and Growth Perspectives in the South Mediterranean Area

This paper empirically analyses overall specialization and revealed comparative advantages of the South Mediterranean countries. The paper has been divided into two sections. The first section deals with the relation between overall specialization and per-capita income, through a semi-parametric estimation of three different indexes of overall specialization, all derived from the distribution of sectoral revealed comparative advantages. GAM estimation demonstrates that overall specialization decreases with the rise of per-capita income and economy size (country specific effects are also considered). The second section deals with South Mediterranean countries, and describes them as countries that have a very high level of overall specialization, due to general and specific characteristics. In particular, there is a high concentration of revealed comparative advantages (RCAs) in traditional products. It is interesting to note that while RCAs are linked (not surprisingly) to low wage levels, very low level of productivity negatively influences unit costs, that are relatively high in most of the non-traditional sectors. Finally, these characteristics seem to be a consequence of limited openness of the South Mediterranean economies.