Constant market shares analysis: uses, limitations and prospects*

Abstract

In this paper, we generalise the constant market shares (CMS) framework, with particular attention to the underlying theoretical conditions required for diagnostic interpretation. The approach is applied to the analysis of the export performance of the Australian processed food sector in South‐East Asia over the period 1980–2003. We conclude that the usefulness of CMS analysis for evaluating a country's international trade performance depends upon the empirical validity of the aggregation assumptions implicit in the diagnostic interpretation.