The Impact of Uncertainty on Trade: The Case for a Small Port

Noor Zahirah Mohd Sidek (), Bhuk Kiranantawat and Martusorn Khaengkhan
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Noor Zahirah Mohd Sidek: Department of Economics, Faculty of Business Management, Universiti Teknologi MARA, Sungai Petani 08400, Kedah, Malaysia
Bhuk Kiranantawat: College of Logistics and Supply Chain, Suan Sunandha Rajabhat University, Dusit, Bangkok 10300, Thailand
Martusorn Khaengkhan: College of Logistics and Supply Chain, Suan Sunandha Rajabhat University, Dusit, Bangkok 10300, Thailand

Economies, 2022, vol. 10, issue 8, 1-18

Abstract: In the present paper, we show how uncertainty emanating from fluctuations in economic uncertainty, news-based uncertainty, and geopolitical risks affect the number of containers exported from Thailand via Penang Port, Malaysia. Our sample extends from January 2009 to May 2020 from three main entry points in the Northern Peninsular Malaysia–Thailand Border: Padang Besar, Surat Thani, and Bukit Kayu Hitam. Two modes of transportation of containers are mainly used for export purposes, namely, road and rai. This study examines the nonlinear effect of uncertainty on trade by employing a two-regime Markov regime-switching approach. The empirical results show that, overall, uncertainty significantly affects the movement of containers in the high-uncertainty regime. Therefore, small ports must continue to diversify their client base to cushion the impact of fluctuations in global trade due to uncertainty.

Keywords: Malaysia–Thailand cross-border trade; economic policy uncertainty; geopolitical news; economic news (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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