Determinants of the Export Performance of LLDCs in Asia Amid the US-China Trade War: An Augmented Gravity Approach

This paper examines the determinants of export performance in Asian landlocked developing countries and evaluates the impact of the United States-China trade war on their export outcomes. The study aims to extend the gravity model framework by incorporating trade-war phases alongside macroeconomic, logistical, and institutional factors to better understand the exposure of landlocked economies to external policy shocks. An augmented gravity model is applied to panel data covering twelve Asian landlocked developing countries and their major trading partners over the period from 2010 to 2024. The analysis employs Ordinary Least Squares and Poisson Pseudo Maximum Likelihood estimators with fixed effects to address heteroskedasticity, zero trade flows, and unobserved heterogeneity. The model includes economic size, geographic distance, logistics performance, regional integration, tariff measures, and interaction terms that capture different phases of the trade war. The results confirm the core predictions of the gravity model. Exporter and importer gross domestic product have positive and statistically significant effects on export flows, whereas geographical distance reduces trade intensity. Tariffs and trade-war-related shocks exert a significant negative impact on exports, with more potent effects during the second phase of the trade war. Improvements in logistics performance and participation in regional trade agreements enhance export performance. Although genuine exchange rate appreciation and higher importer income levels support exports, their positive effects are attenuated by increased trade policy uncertainty. The study relies on aggregate bilateral trade data, which may not capture firm-level adjustment dynamics. The findings highlight the importance of reducing trade costs, improving logistics infrastructure, and strengthening regional integration to enhance export resilience. The paper provides novel evidence on phase-specific trade-war effects on export performance in Asian landlocked developing countries, using an augmented gravity model.