CTTN Research Grants Program: Trade Efficiency and Influencing Factors in the CAREC Region: Based on the Stochastic Frontier Gravity Model

Under the CAREC Institute CTTN Research Grants Program 2021, Wang Yue and Yan Binyang from Renmin University analyzed trade efficiency and influencing factors in CAREC (using the stochastic frontier gravity model) and found that Central Asian countries have insufficient regional cooperation in trade. Their model yielded 56% of countries with a trade efficiency score lower than 0.2. Further, they reported an actual decline in trade efficiency from 2001 to 2020. According to their findings, the transportation cost represented by geographic distance is a major constraining factor in the CAREC region while interconnectivity serves as an important aspect to drive the development of trade. “The trade barrier of export countries is an important factor hindering trade efficiency,” they write. To expand exports, government regulations should be reduced and market forces should be used to realize the effective allocation of resources. “The informatization difference between CAREC countries has a significant negative impact on trade efficiency. Further expansion of informatization gap caused by COVID-19 may become a new hindering factor in the development of trade, which deserves policy attention,” researchers conclude.