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Long Run Sustainability of Sarawak - West Kalimantan Cross-Border Trade Flows

Nurul Bariyah, Evan Lau () and Shazali Abu Mansor ()
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Shazali Abu Mansor: Universitas Tanjungpura, Indonesia

Journal of Developing Areas, 2012, vol. 46, issue 1, 165-181

Abstract: This paper is concerned with the time series behaviour of the cross border trade flows between Sarawak (East Malaysia) - West Kalimantan (Indonesia) conducted through regional port of Tebedu custom district with the main focus on the long run sustainability of Sarawak trade deficits. Cross border trade activity has gain much attention due to the dynamic linkages of this unique regional economic activity on industry, investment and employment, yet the study on long-run relationships of cross border trade flows have been largely overlooked. By employing the three stages of modern time series econometric technique, the research found significant long run cointegration relationship for the bilateral trade flows as well as support for the strong form of sustainability condition, suggesting that Sarawak-West Kalimantan bilateral trade is on the sustainable path in governing their trade flows performance. This suggests that the macroeconomic policies of Sarawak and West Kalimantan have been effective in bringing exports and imports into a long run equilibrium.

Keywords: Bilateral Trade Sustainability; Sarawak; West Kalimantan (search for similar items in EconPapers)
JEL-codes: F10 F40 C32 (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:jda:journl:vol.46:year:2012:issue1:pp:165-181