Revealed Comparative Advantage – Where it is least expected: Dubai

Adherence to the strict interpretation of the principle of comparative advantage would lead one to believe that Dubai, of all places, would not be competitive in merchandise exports. Yet, merchandise exports are Dubai's mainstay and most of them are re-exports. Whereas traditional exports can be rationalised by the strict interpretation of comparative advantage, re-exports cannot. They can only be rationalised under a more general interpretation, with one source of comparative advantage being mitigation of informational problems through intermediation between foreign producers and foreign consumers. An implication for using Revealed Comparative Advantage (RCA) to study Dubai's export competitiveness, as we do in this paper, is to adjust RCA for exports and re-exports.