Asian Journal of Applied Economics

The Impact of the CPTPP on International Trade in ASEAN Countries

Sineenart Sermcheep — 2026-03-17

Background and Objectives: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is widely regarded as one of the most ambitious “high standard” trade agreements currently in force, combining deep tariff liberalization with wide-ranging provisions related to services, investment, regulatory coherence, and emerging areas such as the digital economy. For the Association of Southeast Asian Nations (ASEAN), the CPTPP presents both opportunities and challenges because ASEAN economies are highly trade dependent, deeply embedded in regional value chains, and already connected through multiple overlapping free trade agreements—most notably the Regional Comprehensive Economic Partnership (RCEP). While four ASEAN members (Brunei Darussalam, Malaysia, Singapore, and Viet Nam) are already CPTPP parties, several large ASEAN economies remain outside the agreement. This uneven participation raises a key policy question: will CPTPP-related gains remain concentrated among existing ASEAN participants, or could broader ASEAN accession generate more inclusive benefits at the regional level? Moreover, expanded CPTPP membership—particularly the potential accession of major economies such as China—may reshape patterns of comparative advantage and alter the balance between trade creation and trade diversion for ASEAN economies. Against this background, the study aims to assess how different CPTPP membership configurations may affect ASEAN economies’ trade performance and macroeconomic outcomes. Specifically, it evaluates the distribution of impacts across ASEAN members and non-members under alternative accession scenarios, with attention to changes in trade flows, income (GDP), terms of trade, and welfare.

Methodology: The study employs a computable general equilibrium (CGE) approach using the Global Trade Analysis Project (GTAP) framework and database to simulate the economy-wide impacts of CPTPP-related trade liberalization. The GTAP model is well suited to this task because it captures interlinkages among production sectors and countries through a consistent global input–output structure, allowing the analysis to trace how trade policy shocks affect production, consumption, trade patterns, factor allocation, and welfare. The simulation design considers four scenarios: (1) the current CPTPP configuration (including the United Kingdom’s accession) as the baseline liberalization setting; (2) an expanded CPTPP that adds applicants (China, Taiwan, Ecuador, Costa Rica, Uruguay, and Ukraine); (3) scenario (2) plus Thailand’s accession; and (4) a hypothetical full ASEAN accession in which all ASEAN-10 members join the CPTPP. To provide an upper-bound benchmark for long-run effects, the simulations assume full tariff elimination among participants and incorporate only those non-tariff measure (NTM) reductions that are quantifiable within the GTAP database constraints. Countries/regions and sectors in the GTAP database are aggregated into analytically relevant groupings for ASEAN members and partner blocs, and into a smaller set of production sectors to facilitate interpretation of macro and sectoral channels.

Key Findings: The simulation results indicate that ASEAN economies already participating in the CPTPP tend to experience gains in GDP and welfare under the current membership configuration, whereas most non-member ASEAN economies face adverse effects, consistent with trade diversion away from non-members. When additional economies apply to join the CPTPP—particularly large and diversified producers—impacts become more heterogeneous across ASEAN. The entry of a major economy such as China is associated with more adverse outcomes for several ASEAN countries, reflecting intensified competition and shifts in comparative advantage within the enlarged bloc. When Thailand is included as a CPTPP member, macroeconomic outcomes improve markedly for Thailand relative to non-membership, and broader ASEAN participation tends to mitigate some adverse effects faced by non-members. Under the hypothetical scenario of full ASEAN accession, several ASEAN economies show stronger improvements in macro indicators such as GDP, welfare, and terms of trade, suggesting that wider ASEAN participation can reduce intra-regional exclusion costs and support regional trade performance. However, the magnitude of gains does not increase proportionally as more ASEAN members join. Instead, benefits may diminish for early joiners in some cases, implying that the expansion of membership can redistribute gains within ASEAN and reduce the relative advantage of early participants. Sectoral results further indicate that ASEAN economies’ gains are closely tied to the ability to strengthen comparative advantage in specific industries and to position effectively within regional production networks.

Policy Implications: The findings suggest that, on balance, CPTPP participation is preferable for ASEAN economies, particularly for those currently outside the agreement, because exclusion may entail measurable opportunity costs through trade diversion and reduced welfare. At the same time, the results highlight that ASEAN-wide gains depend on strategic adaptation. To maximize benefits, ASEAN members should identify sectors with the strongest potential for comparative advantage and reinforce competitiveness through industrial upgrading, productivity enhancement, and value-chain development. Given the evidence that membership expansion can dilute relative advantages, policy coordination at the ASEAN level is also important: strengthening regional production networks, harmonizing standards, and improving trade facilitation can help ASEAN economies share gains more broadly and sustain competitiveness within a larger CPTPP environment. Finally, because CGE results reflect modeled long-run comparative-static adjustments and only partial NTM coverage, complementary work that examines sensitive sectors, realistic tariff phase-in schedules, and dynamic channels (e.g., investment and technology diffusion) would further strengthen policy guidance.

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

Haidong Sun — 2026-01-28

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

Guimin Yao — 2026-01-28

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.

ESG Performance and Bank Financial Risk: The Moderating Role of Economic Policy Uncertainty in Vietnam

Thu Quang Luu — 2026-03-15

Background and Objectives: Environmental, Social, and Governance (ESG) practices are increasingly integrated into banking activities as mechanisms to enhance financial stability and support sustainable development. In emerging economies such as Vietnam, however, ESG adoption remains uneven, and empirical evidence on its implications for bank financial risk is still limited. Moreover, banks operate under fluctuating macroeconomic conditions in which economic policy uncertainty (EPU) may alter the effectiveness of ESG performance. This study examines the impact of ESG performance on the financial risk of Vietnamese commercial banks, with particular emphasis on the moderating role of economic policy uncertainty.

Methodology: The study employs panel data from 24 Vietnamese commercial banks over the period 2014–2024. Bank financial risk is measured using the Z-score (insolvency risk) and the loan loss provision (LLP) ratio (credit risk). ESG indicators are manually constructed from annual and sustainability reports based on 16 standardized criteria across environmental, social, and governance dimensions. A key contribution of this study is the construction of an Economic Policy Uncertainty (EPU) index derived from text-mining official policy documents issued by the State Bank of Vietnam and relevant ministries. Panel estimations including Ordinary Least Squares (OLS), Fixed Effects (FE), Random Effects (RE), and Feasible Generalized Least Squares (FGLS) are conducted, with FGLS serving as the preferred specification to address heteroskedasticity and autocorrelation.

Key Findings: The results reveal heterogeneous effects of ESG dimensions on bank financial risk. Environmental performance is associated with lower Z-scores, indicating higher short-term financial risk, while social performance reduces loan loss provisions, suggesting improved asset quality. Governance does not exhibit a significant risk-mitigating effect under stable policy conditions. However, under heightened economic policy uncertainty, the ESG–risk relationship changes significantly. Environmental and social activities tend to amplify financial risk during periods of elevated policy uncertainty, whereas governance emerges as a key stabilizing factor that enhances banks’ resilience.

Policy Implications: The findings highlight that ESG strategies should be aligned with prevailing macroeconomic conditions. During periods of high economic policy uncertainty, strengthening governance mechanisms is critical for risk management and financial stability. In contrast, environmental and social initiatives may yield more sustainable benefits under stable policy environments. Overall, the study underscores the importance of integrating ESG performance with coherent regulatory oversight and macroeconomic stability to support sustainable banking development in emerging economies.

Financial Development and Growth Volatility: Evidence of Nonlinear Effects from Pakistan

Mansoor Mushtaq — 2026-03-10

Background and Objectives: Output growth in Pakistan has exhibited substantial fluctuations over the past decades due to domestic policy shocks, external disturbances, and structural weaknesses in the financial intermediation system. Although a large body of literature links financial development to long-run economic growth, its role in stabilizing or destabilizing growth remains inconclusive. Cross-country evidence suggests that deeper financial systems can dampen macroeconomic volatility; however, this stabilizing effect may weaken or reverse beyond certain levels of financial development. Despite this growing literature, country-specific time-series evidence for Pakistan remains limited, particularly studies that incorporate comprehensive measures of financial development and allow for nonlinear effects. This study therefore aims to: (i) examine the long-run relationship between financial development and growth volatility in Pakistan; (ii) test for nonlinearities through the inclusion of a squared financial development term; and (iii) assess the roles of government expenditure, inflation, consumption, and remittances as additional determinants of growth volatility over the period 1985–2023.

Methodology: Using annual time-series data for Pakistan from 1985 to 2023, growth volatility is modeled as a function of financial development and selected macroeconomic controls. Growth volatility is measured as the five-year rolling standard deviation of GDP per capita growth, capturing medium-term fluctuations while smoothing short-run noise. Financial development is proxied by two alternative measures: (i) domestic credit to the private sector as a percentage of GDP and (ii) a composite financial development index reflecting depth, access, and efficiency. To examine nonlinear dynamics, a squared financial development term is included. The empirical strategy proceeds in two steps. First, Augmented Dickey–Fuller tests are conducted to determine the order of integration, followed by Johansen cointegration tests to identify long-run equilibrium relationships. Second, a Vector Error Correction Model (VECM) is estimated to capture both long-run dynamics and short-run adjustment processes. Robustness checks are performed using alternative financial development proxies.

Key Findings: The results reveal a nonlinear (U-shaped) relationship between financial development and growth volatility. In the long run, financial development initially reduces growth volatility by enhancing risk sharing, smoothing consumption and investment, and improving allocative efficiency. However, beyond a threshold level, further financial deepening is associated with increased volatility, suggesting that excessive or insufficiently regulated credit expansion may amplify macroeconomic instability. Government expenditure, inflation, and consumption are found to increase growth volatility, consistent with evidence on procyclical fiscal behavior and macroeconomic instability in developing economies. In contrast, remittances exert a stabilizing effect by acting as a countercyclical buffer. Robustness analysis confirms the consistency of the nonlinear relationship across alternative measures of financial development.

Policy Implications: The findings support a balanced and well-regulated approach to financial sector reform in Pakistan. While expanding access to credit and strengthening financial infrastructure can reduce growth volatility, effective regulatory oversight and prudent supervision are essential to prevent excessive risk-taking. Strengthening countercyclical fiscal frameworks and maintaining price stability are equally important for macroeconomic resilience. Policies aimed at lowering remittance transaction costs and channeling inflows into productive investment within an inclusive financial system may further enhance economic stability. Overall, financial development—when supported by sound regulation and coherent macroeconomic policies—can contribute to reducing growth volatility in Pakistan.

The Relationship Between Spot and Future Cryptocurrencies: A VECM Approach

Souhir Amri Amamou — 2026-01-28

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

Nithicha Thamthanakoon — 2026-01-30

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.