P . 36-4 t Is Sri Lanka ' s marine products exports competitive ? Analysis of fisheries exports of Sri Lanka

Fish .export ^i1dustry in Sri Lanka has become a good source of foreign exchange earnings. The fficiency of the sector can be improved considerably through the deve/opment o/its trade system. An attempt was made in this paper to determine the performance of fisheries sector trade, lhe degree of export diversity, the price competitiveness of fisheries producr and the impact of fisheries export for the economic glrowth of the country. The present study is based on ii*n series data oertaining to the period from 1995 to 2004. The data on value of export of fisheries product for Sri Lanka was collected from dffirent volumes of External Tiade Sntistics reports. To study tke composition of export of dffirent fisheries products, percentage export value shores were calculated. The concentration rate of export fisheries products was estimated by using the Hirschman-Herfindhal Index. The Simpson Diversity Index was used to measure the diverity of exports of fisheries products. Export competitiveness of fisheries commodities was calculatra ry computing the Nominal Protection Cofficient (NPC) Results revealed that the compound gro*ih rates of fisheries sector were 0.13 and 0.1 percent in terms of value of exports oid quoititl, oy exports respectively. The export diversification indexfluctuated between 76 percent in 1995 and 68 percent in 2004. An examination of NPC for dffirent fisheries prodicts suc.h as prawns, Crqbs and Lobsters indicated that all the goods were competitive inteinationally, because all the values were less than unity every year A regression analysis confirms that there exists a statistically significant and positive association belween exports and economic grawth in Sri Lanka. If Sii Lanka aims to achieve a high rate of economic growth through promoting exports then it h:as ta minimize the fluctuations in export earnings, maintain export comoetitiveness and promote exports. Key worils: Marine products, value of exports, Hirschman-Herfindhal Index, Nominal protection Coeffi cient, Simpson Diversity Ind ex.


Introduction
One of the most important manif'estations of economic globalization is the expansion of international trade.The pro gress ive I i beral i zation of world trade through, the establishment of the World Trade Organization (WTO), however, has created opportunities for developing countries to access developed country markets more easily.In particular, recent efforts to reduce barriers to trade in agricultural and food products, including tariffs, quantitative restrictions and other trade barriers, through the Uruguay Round, provide opportunities for enhanced export performance for both traditional and non-traditional products (Henson and Loader, 2001).
The progressive liberalizatior"r of world trade has created opportunities for developing countries tc become better integrated into the global trading system and to exploit their national and regional comparative advantages (Bathrick, 1998).
Evidence suggests that developing countries have a potential comparative advantage over developed countries in the production ofagricultural 4nd food products (Murphy & Shleifea 1997 ; Edwards, 1992;  Milner, 1990).This applies to traditional products, as well as non-traditional products (Biggs et al., 1996).But the developing countries still face certain barriers to expand their world market share and ability to meet the demands of the world trading system, not only in terms of cornpetitive prices but also for quality and safety standards (ESCAR 1ee6).
Fish export industry in Sri Lanka has besome a good source of foreign exchange earnings.As a foreign exchange earner, the share of fisheries sector in Sri Lanka export had increased from 1.51 percent to 2.61percent during 1993 to 2000, and thereafter started to decline.In 2004, foreign exchange earnings from export ofnsn and fishery products amounted to 9.4'billion Rupees, which is a 6 percent decrease, compared to the previous year earnings.Fish exports are also increasingly important to Sri Lanka relative to other agricultural commodities (Central Bank of Sri Lanka 2003;NARA 2003;EDB 200s).
This paper examines the temporal charrges in the composition of exports of fisheries product, the performance of fisheries sector trade, the price competitiveness of fisheries products, and the impact of fisheries exports on economic growth.

Materials and Methods 1. Sources of Data
The present study is based on time series data pertaining to the period from 1995 to 2004.The data on value ofexport offisheries product for Sri Lanka was collected from different volume of External trade statistics reports (Customs of Sri Lanka 1995-2002).The data on domestic whoiesale prices of prawns, crabs and lobsters was collected from statistic division of Ministry of Fisheries and Ocean Resources.The data on international prices of fisheries products was collected from infofish trade news database.The data on CIF.prices were coilected from custom reports.
To $udy the composition of export of different marine products, percentage shares were calculated using the value of export and import data.The product concentration rate of marine product exports was estimated by using the Hirschman-Herfindhal Index (HHI), a commonly accepted measure of market concentration.It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers.
Giltan L. Dahanayaka and P.Sivarajeh The HHI is calculated by the summing erf squares of each product's market share within teital marketed products.Higher values of the HHI are indicative of greater market concentration, and the values of the index range from 0 (highly un- concentrated) to I (single product concentration).
The classification thresholds are listed below: Ht{I < 0.15 indicates an Lrn-concentrated market 0.15 d" HF{I < 0.25 indieates a moderately concentrated market HHI e" 0.25 inclicates a highl3,eoncentrated market I{HI= pS,2+ PSr2 + PSr2 +.FSrt..... + PS", \rr'here, PS. -the share of values *f exports of irh rnarinr: proiiurct n = Number of rnarine products exported The Simpson Diversity trndex (Sf,ll) was uscrl to measure the diversity of exports and irnports of fisheries products.The value of this index also ranges between 0 and 1, the greater the value, the greater the sample diversity, while lesser the value more concentration.The Simpson Diversity Index defined as 1''cllows, E r"l(lt-,t)

N(N-1)
Wtrere; n -Value of i'h product exporterJ Ftr -Value of total products exporteil.
Diversification can Iorver earnings volarilitl' ifihe country diversifies into products rvith price movements that are not strongly correlated with current exports (Love, 1986).Horvever, ifthe new products are of lower value, there can be a trade- off betu'een greater stability ancl lorver overall value of export earning.Consequently, diversification offers the potential but not the guarantee of greater export stabiliqr and higher export earnings.
Exporl competitiveness of fi sheries eornmodities has been calculated by computing the Norninal D* Protection Coefficient (NPC).This is the ratio of Domestic Price to the Border Price.Compound growth rates were calculated based on Gujarati (f eeSl to examine the trends in fisheries trade' The econometric regression model was used to studythe impact of fisheries exports on economic growth (Metwally, 1980

Results and Discussion
The value of export of marine products during the period 1995 to 2004 is presented in Table l ' The annual export value of the fisheries sector has remarkably increased from Rs.3,655'49 Million in 1995 to Rs.9,435.00Million in2004' There were wide fluctuations seen in the export of lobsters and fish.The share of prawns constituted about 67 percent ofthe export earning offisheries sector in Table 2. Simpson Diversity Index (sDI) and Herfindhal-Hirschman Index (HHI) for exports of fisheries Products (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004) 1998, followed by earnings from export of orna- mental fish.The share of exports of prawns had declined sharply during this period to 26 percent, while the share of export of fish had increased significantly to 47 percentby 2004.
The extent of diversification in the export of fisheries products showed mixed trends' Table 2 indicates the HHI and SDI of commodity concentration rate for the period 1995-2004' Both indices reflected a declining trend during 1998 to 2004, Both the two estimates provide closely similar values, thus reflecting the degree of marine export products concentration pattern.Since 1 999 the values of both indices started to decline, because they had relatively become more concentrated and less diversified.This means export earnings from fisheries products in Sri Ldnka highly dePends on one or a few commodities.The SDI for marine products exported fluctuated between 0'37 in 1995 to 0'30 in 2004.However, moderate export product diversity had occurred in 1998 when both the indices reached to the highest levels, which was 0.47.The compound growth rate was worked out to identiff the rate of growth in marine products exports in terms of quantity and value of fisheries products.The'annual growth rate of fisheries products exports in terms of quantity and value were 0.13 and 0'1 respectively.Both values indicated positive signs reflecting the increasing trend in fisheries exports.Figure 1 indicates the trends in export, import and net trade of fisheries product in Sri Lanka' This figure revealed that .u.ry ytut net trade value was positive because totai fisheries exports exceeded total imports significantly.In year 2000 it reflected the highest net trade value in marine products exports after adjustment for the inflation.of Fisheries products (1994Fisheries products ( -2004) ) c.r J g AGRTEAST 201CI (9) Giftan l-" Dahanayak a a'tC f, lliirara.;''.:r?

ConelusinnEs anei F'ofliey trrnplientioxls
The study showed that the oompound greit*'tir rates of marine produets export seetor werer il.i 3 and 0.1 percent in terms ofvalue and quantity* of exports respectively.Regression results revealed that marine produets exports had marginally stimulated the growth. of output in Sri l,anka" The diversity indexvalues and eoneentration indiees values show Sri I-anka fisheries export became more concentrated and less diversified.Within fisheries products prawns, lobsters and eral:s, Sri tr-anka was reasonably competitive in intemational market, this was revealed by ealeulating l'lominal Protection Co-efficient values.The world demand for fisheries'produet eonsumption is inereasing br:th because of incomes and population growth and also due to the substitution of fish in place of meat" Therefore, SriLanka needs to promote export of competitive fishery produets to the world market to achieve high rate of eeonomie growth in Sri Lanka.To achieve high growth rate it has to try to minimize the fiuctuations in fisheries export eamings and wants to find out niche market for our fishery products and in the nteantime we want to export value added fishery products insteael of exporting raw products.