International Trade Pattern between Thailand and Greater Mekong Sub-region Countries

Abstract

Background: The present paper tries to explain the international trade pattern; both export
value and import value, between Thailand and countries in the GMS (the Greater Mekong Subregion) during the period of 1981 to 2010. The gravity model theory that explains the trade pattern by using the geographical –economic variables is employed in this paper.

Objective: To study the cooperation framework, including the trade and investment cooperation between Thailand and the Laos People’s Democratic Republic. To study the trend of trade and investment pattern between Thailand and the Laos People’s Democratic Republic. And to provide the policy suggestion for the sustainable development in cooperation between Thailand and the Laos People’s Democratic Republic.

Result : This paper explains the relation between trade pattern and geographic-economic variables by the method of Generalizes Least Square with panel data set. It is found that the geographic-economic variables that affect the trade pattern are real GDP, import tariff rates, trade policies of trading partners, and the distance between two trading partners. In this paper, the distance is used as a proxy variable of transaction costs.

Discussion and Conclusion: Finally, this paper provides the policy recommendation in order to enhance trade among the GMS countries. It is found that trade-cooperative policies may generate more benefit to Members than trade policies that focusing on completing each others. Re-structuring on production process, the improvement in productivity, and the reduction in transaction –cost are the necessary conditions in order to promote interregional trade as well.