The Greater Mekong Subregion (GMS) - Cambodia, People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam. Cambodia, Lao PDR, Myanmar, Thailand, Viet Nam, Yunnan Province of PRC, and Guangxi Zhuang Autonomous Region of PRC - economies have grown impressively over the last decade and a half as many of them started the process of transition from centrally-planned to market-based systems and forged closer integration with external markets. Strong rates of economic growth have been fueled in part by increased trade orientation. Enhancing trade further is an important element of the development strategies of the GMS economies.

This paper outlines the trends and patterns of merchandise trade of the GMS economies. It discusses tariff and nontariff barriers, as well as other constraints to trade in Cambodia, Lao People’s Democratic Republic, and Viet Nam (CLV). A lack of information precludes an equal focus on Myanmar, as well as Guangxi Zhuang Autonomous Region and Yunnan Province of the People’s Republic of China (PRC). Thailand and the PRC are included primarily as reference points. The paper concludes with some policy implications.

Exports from the seven GMS economies, based on recorded trade flows, rose from $37 billion in 1992 to $154 billion in 2005, or at a compound average annual rate of 11.6%, compared with an 8.4% rise in world exports.

Export growth was particularly strong in Cambodia and Viet Nam. A number of factors contributed to the successful performance, including unilateral reforms to liberalize trade and investment, rehabilitation and improvement of infrastructure and institutions, and greater market access in regional and developed country markets.

The increase in GMS countries’ trade has been accompanied by a marked change in the commodity structure of exports. The structure has evolved according to each country’s comparative advantage.

GMS countries are generally rich in agricultural and natural resources and, with its low-cost labor, possess a competitive edge in laborintensive manufactured goods.

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© 2007 Asian Development Bank

INTRODUCTION
The Greater Mekong Subregion (GMS) economies have grown impressively over the last decade and a half as many of them started the process of transition from centrallyplanned to market-based systems and forged closer integration with external markets. The seven GMS economies grew 8.3% per year on average during 1992-2006.

All the economies, except Thailand, expanded at an average annual rate of at least 6.5%. Thailand’s growth was held back primarily by the effects of the 1997–1998 financial crisis. Strong rates of economic growth have been fueled in part by increased trade orientation.

Enhancing trade further is an important element of the development strategies of the GMS economies. Policies to enhance trade, set within a broad reform agenda, can further promote growth and reduce poverty. Trade leads to greater specialization in accordance with a country’s comparative advantage and a more efficient allocation of scarce economic resources.

It enlarges the market for products and enables domestic producers to benefit from economies of scale. Importantly, trade increases productivity growth and welfare by enhancing competition, raising foreign direct investment (FDI), and providing access to new products and ideas.

This paper outlines the trends and patterns of merchandise trade of the GMS economies. It discusses tariff and nontariff barriers, as well as other constraints to trade in Cambodia, Lao People’s Democratic Republic [Lao PDR], and Viet Nam (CLV). A lack of information precludes an equal focus on Myanmar, as well as Guangxi Zhuang Autonomous Region (Guangxi Zhuang AR) and Yunnan Province of the PRC. Thailand and the PRC are included primarily as reference points. The paper concludes with some policy implications.

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