Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/206614 
Title: 

Impact of institutional and cultural distance on ASEAN's trade efficiency

The document was removed on behalf of the author(s)/ the editor(s).

Year of Publication: 
2019
Series/Report no.: 
Economics Discussion Papers No. 2019-57
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This paper aims to analyze the impact of institutional and cultural distance on ASEAN's trade efficiency using bilateral trade data from 2006 to 2016. The authors first employ an improved version of the stochastic frontier model to control endogeneity in estimating efficiency scores and then apply a sys-GMM model to estimate the impact of various distances on trade efficiency. The major findings are summarized as follows: first, trade efficiency of ASEAN's with the rest of the world is moderate, ranging from 0.48 to 0.60, and shows a downward trend. This indicates that considerable trade potential exists between ASEAN countries and the rest of the world. Second, institutional and cultural distance negatively affects ASEAN's trade efficiency. Third, trade freedom is an important factor that positively influences ASEAN's trade efficiency. Based on these findings, this study concludes that efforts to reduce differences in institutions and culture and to promote trade liberalization are strongly suggested as remedies for ASEAN countries to turn potential trade performance into actual trade performance.
Subjects: 
trade efficiency
endogenous stochastic frontier model
endogeneity
system GMM
ASEAN
JEL: 
F14
C55
F15
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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The document was removed on behalf of the author(s)/ the editor(s) on: March 4, 2020


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