International Trade Structure Change and Determinants in Laos, 2000-2014

Abstract

This paper uses the Trade Structure Change Index (TSCI) to analyse the trade structure change of Laos during the period 2000-2014 and then use the panel data regression analysis with fixed effects model to discuss the determinants. Low import TSCI indicates inadequate economic vitality and slow economic growth in Laos, with the cause possibly being insufficient capital goods import. Large export TSCI indicates unsteady export trade structure and comparatively weak product competitiveness. Laos’s major export products are still primary products with low value-added; The determinants of the import trade structure of Laos are gross domestic product (GDP), foreign direct investment (FDI) and economic structure similarity with other countries, but the effect of ASEAN Free Trade Area (AFTA) is insignificant; The determinants of the export trade structure of Laos are GDP and AFTA, but the explanatory power remains uncertain due to the serious trade deficit problem in Laos.