Economic Integration of Yunnan with the Greater Mekong Subregion*

Abstract

This paper examines the process of economic integration between the Chinese province of Yunnan and its riparian areas of the Mekong region. The gravity model of trade is used to investigate the evolution of Yunnan's international trade integration between 1988 and 1999. Although Greater Mekong Subregion cooperation efforts have had a positive effect on trade, trade has progressively decreased from an above‐standard level to a normal level, according to the gravity model of trade. During this process, Yunnan's trade has increased with other countries such as Singapore, Indonesia and Malaysia. This evolution is in line with Yunnan's development and indicates a progressive re‐orientation of its trade toward more developed partners. The results suggest that the Mekong cooperation project has to broaden its perspective, taking into consideration Yunnan's expanding trade relations with countries outside the Greater Mekong Subregion.