Factors Influencing the Lao PDR Import Value of Processed Agricultural Products from Thailand during the Covid-19 Pandemic

Abstract

This study investigates the impact of the Lao macroeconomic factors of real gross domestic product, the Openness Index, and the exchange rate between the Thai and Lao currencies on the Lao import value of agricultural processed products from Thailand. Using product classifications and data from the International Trade Centre, this research examined the total import value (IM) and value of the imported product categories of sugar (HS17), flour (HS19), miscellaneous edible preparations (HS21), beverages (HS22), and animal fodder (HS23) (as dependent variables). The analysis employed the Autoregressive Distributed Lag approach, and the Vector Error Correction Model was applied to analyze the level relationship and test causal relationships among variables by using quarterly time series data from Q1 2012 to Q3 2021. Results show long-run and short-run relationships between GDP and both IM and HS17, but only a long-run relationship with HS22 and a short-run effect on HS19. Following the effects of COVID-19, HS22 will be the fastest market to recover. GDP has the greatest effect on IM in the long run. Granger causality of real GDP was seen running to imports on IM, HS17, and HS19; Openness running to IM and HS19; and exchange rate running to HS17, HS19, HS21, and HS22, with only HS23 unaffected by any factor.