The The Mediating Role of International Trade on the Relationship between Transportation Infrastructure and Economic Growth in Lao PDR

Kaysone  Xayyalath; Phoumsaydavone  Sombounsack

Authors

Kaysone Xayyalath Academic Affair Office, Savannakhet University, 1300 Laos https://orcid.org/0009-0007-1578-8119
Phoumsaydavone Sombounsack Faculty of Business Administration, Savannakhet University, 1300 Laos

Keywords:

Transportation infrastructure, International trade, Economic growth

Abstract

This study investigated the relationship between transportation infrastructure and economic growth mediating the role of international trade in Laos. The study used panel data obtained between 2013 and 2022 and is quantitative research. The following sources provided the data: Ministry of Planning and Investment, Laos Statistic Bureau, World Bank, Bank of Laos, and Ministry of Public Work and Transportation. The analysis employed simple and multiple regression with fixed-effects and random-effects models, selected via the Hausman test. In addition, for testing the link between economic growth and transportation infrastructure as mediated by international trade a Sobel test was conducted. The result showed that transportation infrastructure and international trade are not statistically significant. It represented that transportation infrastructure is not influenced by economic growth. However, the research found a positive relationship between transportation infrastructure and economic growth. It explains that when transportation infrastructure increases then economic growth will increase. Furthermore, the result showed a negative relationship between international trade and economic growth. The results found that when international trade increases by one unit then economic growth decreases by one unit and in the opposite way when international trade decreases by one unit then economic growth would increase one unit. Moreover, the result represented that the association among transportation infrastructure and economic growth was not mediated by international trade. Therefore, the Lao government should prioritize international trade by reducing imports of non-essential goods and increasing export value to address the country's trade deficit. Additionally, the government should invest more in transportation infrastructure by improving and expanding roads connecting urban and rural regions.

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