Export Growth, Export Potential and Export Resistance A Case Study of Laos

This study applies a stochastic frontier gravity model to examine Laos' export potential as well as factors hindering its export growth. This article uses a panel data of thirty-four importing countries from 2001 to 2011. Three main export growth factors are analysed in the model: (i) core factors (income per capita, population, and distance); (ii) implicit behind-the-border constraints; and (iii) implicit beyond-the-border constraints. The findings show that only half of the country's export potential has been realized to date and export losses can primarily be attributed to implicit behind-the-border constraints. At the same time, these constraints have been reduced during the last decade. This article identifies border trade, a common language, income per capita and the Generalized System of Preferences scheme as important factors for export growth. Conversely, it finds that an appreciating real exchange rate is a signal of a slowdown in export growth.