Asian Journal of Applied Economics

Provincial Differences in Cultural–Tourism Integration Efficiency and Their Driving Mechanisms in China

2025-11-03T15:13:05+07:00

Background and Objectives: The integrated development of culture and tourism has become a central pillar of China’s strategy for promoting high-quality economic growth, industrial upgrading, and cultural soft power. Beyond its contribution to output expansion, cultural–tourism integration embodies the efficient reallocation of public resources, the coordination of cultural services and tourism markets, and the pursuit of balanced regional development. Despite its strategic importance, substantial disparities persist in the efficiency with which Chinese provinces transform fiscal, institutional, and human resources into cultural and tourism outputs. Existing empirical studies have provided valuable insights into cultural–tourism efficiency, yet many remain limited in scope, focusing on single regions or relying on isolated analytical techniques. Moreover, the structural sources of regional inequality and the mechanisms through which socio-economic and policy factors shape efficiency outcomes have not been systematically examined at the national level. Against this backdrop, this study aims to assess provincial differences in cultural–tourism integration efficiency across mainland China, to identify the structural sources of regional disparities, and to uncover the key driving mechanisms underlying these differences within a unified analytical framework.

Methodology: Using cross-sectional data for 31 provincial-level administrative regions in mainland China for the year 2023, this study adopts a three-step empirical strategy. First, an input-oriented Banker–Charnes–Cooper data envelopment analysis (BCC-DEA) model under variable returns to scale is employed to measure provincial cultural–tourism integration efficiency, focusing on the transformation of fiscal inputs, institutional capacity, and human resources into cultural service provision and tourism outputs. Second, to examine regional disparities and their structural sources, population-weighted Theil indices are calculated for a set of per-capita cultural and tourism indicators, allowing overall inequality to be decomposed into interregional and intraregional components. Third, drawing on the Ritchie–Crouch destination competitiveness framework, a driving-factor indicator system encompassing demand conditions, environmental foundations, policy support, and supporting elements is constructed. An entropy-weighted Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) approach is then applied to evaluate the relative importance and comprehensive influence of these driving factors across provinces. To enhance robustness and comparability, all indicators are subject to appropriate preprocessing, including winsorization and standardization where necessary.

Key Findings: The results reveal pronounced heterogeneity in cultural–tourism integration efficiency across China’s provinces. Overall efficiency levels remain relatively low nationwide, with only about one-third of provinces achieving DEA strong efficiency. Efficient provinces are primarily concentrated in the middle and lower reaches of the Yangtze River and parts of Central China, while many provinces in the Northeast, Northwest, and Southwest exhibit substantial inefficiencies characterized by input redundancy and output shortfalls. The Theil index analysis indicates that disparities in per-capita fiscal input constitute the most significant source of regional inequality, far exceeding disparities observed in public cultural services and tourism consumption outcomes. In contrast, indicators related to public cultural services, such as library circulation and museum visits, display relatively small disparities, suggesting the effectiveness of national equalization policies in this domain. The driving-factor analysis further demonstrates that household consumption capacity, population scale, and fiscal prioritization exert the strongest influence on provincial efficiency differences, whereas macroeconomic development level and higher-education resources play more limited roles in the short term. Provinces with stronger demand-side conditions and clearer fiscal prioritization tend to exhibit higher efficiency, while regions with weak consumption capacity and constrained fiscal support lag behind.

Policy Implications: These findings underscore the need for a coordinated and differentiated policy approach to improving cultural–tourism integration efficiency in China. First, performance-oriented fiscal allocation mechanisms should be strengthened to ensure that public spending is more effectively translated into cultural and tourism outputs, particularly in provinces with persistent inefficiencies. Second, demand-side cultivation policies aimed at enhancing household consumption capacity and expanding diversified cultural–tourism products can generate more immediate efficiency gains. Third, region-specific governance strategies are required to address structural disparities, with western and northeastern provinces benefiting from targeted support that aligns fiscal inputs with local demand conditions and resource endowments. Overall, improving cultural–tourism integration efficiency depends less on expanding resource inputs than on enhancing implementation quality, policy coordination, and demand–supply alignment, thereby promoting more balanced and high-quality cultural–tourism development across regions.

Pork Market Shocks and Inflation Dynamics in China

2025-07-09T19:01:10+07:00

Background and Objectives: Pork occupies a central position in China’s consumption basket and plays a critical role in shaping inflation dynamics, particularly through its substantial weight in food prices and its salience in public inflation expectations. Fluctuations in pork prices have long been associated with the so-called “pig cycle,” traditionally viewed as a supply-driven phenomenon rooted in biological production lags. However, with the increasing complexity of China’s food system, market liberalization, and heightened uncertainty arising from disease outbreaks, policy interventions, and global shocks, pork prices are no longer determined solely by supply-side factors. Demand-side pressures and precautionary behavior have become increasingly important, potentially amplifying inflation volatility. Existing studies often rely on linear frameworks or event-based approaches, which may obscure the nonlinear and state-dependent nature of inflation responses to pork-market shocks. Against this backdrop, this study aims to examine how different types of pork-market structural shocks—supply, demand, and precautionary demand—affect inflation dynamics in China across distinct inflation volatility regimes. By explicitly incorporating regime dependence, the study seeks to provide a more nuanced understanding of pork-driven inflation transmission and its implications for macroeconomic stabilization.

Methodology: The analysis employs monthly data covering the period from January 2009 to November 2024. A two-stage empirical strategy is adopted. In the first stage, pork-market structural shocks are identified using a structural vector autoregression (SVAR) framework inspired by the commodity-market identification strategy proposed by Kilian. Pork supply shocks are proxied by changes in production, demand shocks by slaughter volume, and precautionary demand shocks by real pork prices. In the second stage, the transmission of these shocks to overall CPI inflation and food CPI inflation is examined using both a linear benchmark model and a nonlinear Markov-switching regression. The Markov-switching framework allows inflation dynamics to differ endogenously between low- and high-volatility regimes, capturing nonlinear pass-through mechanisms that cannot be identified in linear models. In addition, the study investigates the role of policy-specific economic policy uncertainty indices in driving regime transitions, thereby linking pork-market shocks to broader macroeconomic uncertainty.

Key Findings: The empirical results reveal strong state dependence in the inflationary effects of pork-market shocks. In low-volatility inflation regimes, supply shocks and precautionary demand shocks are the primary drivers of inflation, while demand shocks play a limited role. In contrast, during high-volatility regimes, demand shocks and precautionary behavior dominate inflation dynamics, indicating that consumption pressures and expectation-driven responses become more influential when inflation is unstable. Across both regimes, food CPI inflation responds more strongly to pork-market shocks than headline CPI inflation, underscoring pork’s role as a key amplifier of food-price pressures. The analysis further shows that supply shocks exhibit delayed effects on inflation, consistent with the long biological production cycle in pork markets, whereas demand and precautionary shocks exert more immediate impacts. Moreover, monetary policy uncertainty emerges as the most important factor triggering transitions between low- and high-volatility inflation regimes, highlighting the interaction between commodity-specific shocks and macroeconomic policy credibility.

Policy Implications: The findings point to the necessity of explicitly state-contingent inflation stabilization policies in China. In low-volatility environments, policy efforts should prioritize supply-side stabilization by enhancing production resilience, improving disease prevention, and strengthening the pork supply chain to mitigate delayed inflationary pressures. In high-volatility regimes, however, demand management and expectation anchoring become more critical, requiring timely policy communication, real-time price monitoring, and measures to curb precautionary and speculative behavior. Strengthening early-warning systems for pork prices and integrating information from futures markets and policy indicators can further improve inflation management. More broadly, the results suggest that effective inflation control in economies where staple food commodities play a central role requires adaptive policy frameworks that recognize nonlinear transmission mechanisms and regime-dependent dynamics.

The Relationship Between Spot and Future Cryptocurrencies: A VECM Approach

2025-11-03T15:09:15+07:00

Background and Objectives: The rapid expansion of cryptocurrency derivatives markets has fundamentally reshaped price formation, risk transmission, and informational efficiency in digital asset ecosystems. Among these assets, Bitcoin occupies a dominant position, with spot and futures markets jointly influencing trading behavior, volatility dynamics, and inflationary spillovers into broader financial systems. While economic theory predicts a close linkage between underlying assets and their derivatives, the nature of this relationship in cryptocurrency markets remains complex due to extreme volatility, fragmented trading venues, and the absence of a centralized regulatory framework. Existing empirical studies provide mixed evidence on whether Bitcoin futures stabilize spot markets through improved price discovery or amplify volatility through speculative trading, particularly during crisis episodes. Moreover, much of the literature examines long-run equilibrium, short-run dynamics, or volatility spillovers in isolation, without integrating these dimensions within a unified analytical framework. Against this background, this study aims to investigate the short- and long-run relationships between Bitcoin spot and futures markets, to assess their roles in price discovery and volatility transmission, and to examine how major crisis episodes—specifically the COVID-19 pandemic and the Silicon Valley Bank (SVB) event—affect market connectedness.

Methodology: The study employs daily data on Bitcoin spot and futures prices spanning the period from December 29, 2017, to February 18, 2025. The empirical analysis follows a multi-stage econometric strategy. First, unit root and cointegration tests are conducted to establish the time-series properties of the data and the existence of a long-run equilibrium relationship. A Vector Error Correction Model (VECM) is then estimated to capture both long-run cointegrating relationships and short-run adjustment dynamics, allowing for an explicit assessment of price discovery roles between spot and futures markets. To further explore time-varying interdependence and volatility spillovers, a two-step volatility framework is adopted. In the first step, a BEKK-GARCH model is used to model the dynamic variance–covariance structure and to extract conditional correlations between spot and futures returns. In the second step, these correlations are analyzed using a GJR-GARCH specification to capture asymmetric volatility effects and to quantify the impact of crisis episodes through event-specific dummy variables. This integrated approach enables a comprehensive examination of mean dynamics, volatility transmission, and crisis sensitivity within a single analytical framework.

Key Findings: The empirical results provide strong evidence of a stable long-run cointegrating relationship between Bitcoin spot and futures prices, indicating that the two markets are closely linked over time. Short-run dynamics reveal a clear asymmetry in adjustment behavior: deviations from the long-run equilibrium are primarily corrected through movements in the spot market, while the futures market plays a leading informational role, consistent with its function in price discovery. Volatility analysis uncovers significant and persistent bidirectional spillovers between spot and futures markets, suggesting a high degree of dynamic interdependence. The estimated GARCH parameters indicate strong volatility persistence and pronounced asymmetric effects, whereby negative shocks exert a larger and more persistent influence on market connectedness than positive shocks of similar magnitude. Crisis-specific analysis shows that the COVID-19 pandemic significantly weakened spot–futures connectedness, reflecting heightened uncertainty and structural disruption during periods of systemic stress. In contrast, the SVB episode does not exhibit a statistically significant impact on market interdependence, suggesting that not all financial disturbances transmit uniformly to cryptocurrency markets.

Policy Implications: The findings highlight the need for regulatory and supervisory frameworks that explicitly account for the interconnected and state-dependent nature of cryptocurrency markets. Given the leading role of futures markets in price discovery, enhancing transparency, liquidity oversight, and information disclosure in derivatives trading platforms is essential for maintaining orderly market functioning. The strong persistence and asymmetry in volatility spillovers further underscore the importance of real-time monitoring systems capable of identifying and mitigating the amplification of adverse shocks. During periods of heightened uncertainty, policy interventions should focus on stabilizing market expectations and limiting excessive speculative behavior that may exacerbate volatility transmission between spot and futures markets. More broadly, the results suggest that effective oversight of cryptocurrency markets requires adaptive, state-contingent regulatory approaches that recognize nonlinear dynamics and crisis-sensitive transmission mechanisms, thereby supporting market stability without stifling financial innovation.

Determinants of Cross-Border Trade in Thai Agricultural Products

2025-11-28T12:02:24+07:00

Background and Objectives: Cross-border trade plays an increasingly important role in supporting agricultural exports in Southeast Asia, particularly for countries with extensive shared land borders. For Thailand, agricultural trade with neighboring countries—Cambodia, Lao PDR, Myanmar, and Malaysia—has become a critical alternative market that helps reduce reliance on traditional export destinations and enhances regional food security. Despite the long-standing implementation of tariff liberalization under the ASEAN Free Trade Area (AFTA), cross-border agricultural trade in the region continues to face significant structural and institutional constraints, including inadequate border infrastructure, complex customs procedures, political instability, and evolving non-tariff barriers. Existing empirical studies on Thailand’s border trade have largely focused on traditional gravity variables or qualitative assessments, while relatively limited attention has been paid to the comparative role of trade facilitation mechanisms and governance-related factors. This study aims to examine the structural and institutional determinants of Thailand’s cross-border agricultural exports and to identify the most effective mechanisms for promoting trade expansion under conditions of logistical constraints and regional uncertainty. By distinguishing between traditional economic drivers and modern trade facilitation and institutional factors, the study seeks to provide policy-relevant insights for strengthening Thailand’s role as a regional food hub.

Methodology: The study employs an augmented gravity model estimated using the Poisson Pseudo Maximum Likelihood (PPML) method with fixed effects. This estimation technique is chosen to address heteroskedasticity, mitigate Jensen’s inequality bias, and accommodate zero trade flows without losing information. The empirical analysis covers the period from 1989 to 2024 and focuses on Thailand’s agricultural exports to its four neighboring countries with shared land borders. Agricultural products are classified into five major groups: live animals and animal products, plant products, animal and vegetable fats and oils, prepared foodstuffs, and rubber and rubber products. The model incorporates conventional gravity variables—such as GDP, population, and distance—alongside border-specific and institutional variables, including the number of border crossing points, the implementation of AFTA, the establishment of the ASEAN Trade Facilitation Joint Consultative Committee (AFTJCC), and governance indicators. Major macroeconomic shocks, including the 1997 Asian financial crisis, the 2008 global financial crisis, and the COVID-19 pandemic, are also controlled for to capture external disruptions affecting regional trade dynamics.

Key Findings: The empirical results reveal that the expansion of border crossing points is the most influential determinant of Thailand’s cross-border agricultural exports, particularly for live animals and animal products. This finding underscores the critical importance of physical accessibility and border infrastructure in facilitating agricultural trade, especially for perishable and time-sensitive products. Among institutional factors, the establishment of the AFTJCC has a significant positive effect on rubber exports, while the impact of AFTA tariff liberalization appears relatively limited across most product groups. This pattern suggests a structural shift from tariff-based barriers toward non-tariff obstacles, such as customs procedures, regulatory complexity, and infrastructure bottlenecks. In addition, the study finds a positive association between political instability in neighboring countries and Thailand’s exports of live animals and plant products, reflecting heightened demand driven by food security concerns during periods of regional uncertainty. Governance-related variables exhibit heterogeneous effects across product categories, indicating that improvements in government effectiveness, political stability, and regulatory quality influence agricultural trade in different ways depending on product characteristics and destination markets.

Policy Implications: The findings suggest that Thailand should prioritize strategic investment in border infrastructure by increasing the number of border crossing points and upgrading temporary checkpoints to permanent facilities, as physical access remains the most decisive factor in promoting cross-border agricultural trade. Given the diminishing marginal impact of tariff liberalization under AFTA, trade policy should increasingly focus on reducing non-tariff barriers through streamlined customs procedures, harmonized sanitary and phytosanitary standards, and enhanced trade facilitation mechanisms. Thailand can further strengthen its position as a reliable regional food hub by ensuring continuity in the supply of essential agricultural products during periods of political and economic instability in neighboring countries. Commodity-specific policies are also recommended, such as reinforcing AFTJCC-related mechanisms for the rubber sector. Finally, improving governance and transparency at border points through digitalization and the full implementation of Single Window systems will be essential for fostering long-term trade trust and sustainable cross-border economic growth.