The Competitiveness and Complementarities of Agriculture Trade among ASEAN-5 Countries: An Empirical Analysis

Abstract

The trade of agriculture products between ASEAN countries has grown rapidly since the establishment of the ASEAN Free Trade Area (AFTA). By using the Revealed Comparative Advantage (RCA) and Intra-Industry Trade (IIT) indexes, this study empirically analyses the competitiveness and complementarities among the ASEAN-5 countries for agriculture products. The results shows that IIT is relatively limited and RCA for Thailand, Indonesia and Vietnam revealed intense competition among each other in the agriculture sector. Interestingly, the results also showed that Vietnam strongly competed against Thailand and Indonesia, which was detrimental towards both these countries and resulted to these countries losing their competitiveness in several product categories. ASEAN-5 countries have also shown diverse trends of competitiveness for each product category in the agriculture industry and the level of competitiveness coupled with low intra-industry trade reflect that there are policy mismatches that curb further trade integration in the industry despite several efforts under AFTA.