The Factors Affecting the Exports of Laos to China

Abstract

This paper aims to study:  the factors affecting on Lao PDR's exports to China from 1995-2020 by using OLS robust model.

          The results shown that Lao PDR has a trade balance with China, especially since 1995-2010, there is a continuous trade deficit because during that period, the production base has not brought technology to help. The largest trade deficit is in 2013 with a deficit of 860.92 million dollars, accounting for 7.19% of the gross domestic product and the smallest deficit is in 1997 with a deficit of 4.64 million dollars, accounting for 0.27% of the gross domestic product.

            For the OLS Robust model, it was found that the per capita income is the most important or the most impactful and has a one-way relationship with the export value of Lao PDR with a statistical significance level of 0.05. It means that if other factors are assumed, when the per capita income of Chinese people increases by 1%, it will result in the export value of Lao PDR increasing by 3.01% and vice versa, if the per capita income of Chinese people decreases by 1%, it will result in the value of Lao PDR's exports to China decreasing by 3.01%. as well. Followed by the economic growth rate of Lao PDR. Assuming that other factors are constant, when the economic growth rate of Lao PDR increases by 1%, it will result in the value of its exports to China increasing by 0.13% and vice versa, if its economic growth rate decreases by 1%, it will result in the value of its exports to China decreasing by 0.13% with a statistical significance level of 0.1. The inflation rate of Lao PDR affects the export of Lao PDR to China in the same direction with a statistical significance level of 0.01, which means that assuming other factors are constant, when the inflation rate of Lao PDR increases by 1%, it will result in the value of Lao PDR's exports to China increasing by about 0.01%. But on the other hand, if the inflation rate of the Lao PDR decreases by 1%, it will result in the value of its exports to China or China's imports from Laos decreasing by 0.01% because they feel that the goods are more expensive and the independent variables used in the model can explain the variables up to 94%.