The Global Competitiveness and Comparative Advantages of Agri-Food Sectors

Introduction

According to data of FAOSTAT 46.4% of population in the world live in rural area (2014). Part of this population lives without any resources and they fight daily to ensure the sufficient quantities of food for their families. The main activity of population in rural area is agriculture, and therefore the support to rural development is at the same time the struggle against poverty and hunger. As Jelić and Jovanović (2006) point out, agriculture mostly participates in the creation of income of rural area and in that way ensures the survival of rural population. However, it is necessary to integrate the agricultural production with a secondary and tertiary sector, by which would ensure a higher level of agri-food products marketability and interconnection of agricultural and food industry. The role of agriculture in the development of society is crucial, whether it is about rural development or sustainability of resources. Improvement of agricultural production aims to use more the available natural resources, increase the processing capacities and improve the social position of population. Contemporary trends in agriculture show the presence of growth rates, although an uneven production rearrangement is present. Some authors point out to divergence between the expansion of demand in some regions and the supply potential. The consequence is the expansion of trade with specific products and overexploitation (Dyson, 1999). Global demand for food increases and as a result of this expansion enhances the influence on environment (Tilman, Balzer, Hill & Befort, 2011). As they emphasize, for the preservation of global biodiversity it is important “that adapts and transfers technologies to under yielding nations, enhances their soil fertility, employs more efficient nutrient use worldwide, and minimizes land clearing provides a promising path to more environmentally sustainable agricultural intensification and more equitable global food supplies” (p. 20264). For decades backwards, the development of agriculture in some of countries worldwide, doesn’t keep up with agricultural progress, neither in technical-technological, nor in organizational sense, which work restrictively on the increase of productivity and efficiency (Paraušić & Cvijanović, 2007). Modern developmental concept of agri-food production should base on the increase of competitiveness, innovations and employment in rural area. However, contemporary researches point out that development and food production are not just a question of the production aspects improvement, but also making a new symbolism and built-in new meaning in products (Manniche & Testa, 2010). Limiting factors of agricultural and food industry development of a country is surely environment, i.e. the state of natural resources, characteristics of industry and organizational development. It is well known that every country has its way and strategy of agricultural and food industry development; that every strategy is not a guarantee for success, and therefore these countries have different developmental levels. More competitive countries are capable to offer on the world market products which other countries don’t have or are more competitive with price or quality or more efficient use of resources they satisfy the specific requirements of consumers.

In this chapter the authors tried to explain the role and significance of agri-food production at the global level. In becoming clear the level of competitiveness and comparative advantage of agri-food sector first were defined and then explained the following indicators: structure of agricultural area and agricultural production in the world, the level of foreign trade exchange with products in agri-food sector. Analysis of trade with products of agri-food sector was performed in this chapter and a level of comparative advantage and specialization in international trade with products of agri-food sector globally was measured. Within this chapter, the authors were analysing export of all sections which made agri-food sector, according to HS 07 classification. The authors determined which sectors dominate in export, import and which sectors have the highest foreign trade deficit. The level of comparative advantage of these mentioned sections export was measured. In addition to this, after empirical evidences the authors were comparing conclusions of their and other conducted research. The authors gave guidance for future research, based on conclusions, which would round off this topic.

In this research the following formulas were used: (6), (7), (9). In detail interpretation of all formulas can be found enclosed at the end of the book in the Appendix.