This publication is the fourth in a series produced by the Development Analysis Network (DAN) with contributions from leading development research institutes in Cambodia, Laos, Thailand and Vietnam. The theme for DAN IV is the Cross Border Economy of the four member countries of DAN, focusing on regional and cross border trade and trade-facilitation policy, structure and conduct of both formal and informal trade and the impact on household welfare, especially of those living along the border zones. 

The countries of the Mekong region are among the most dynamic in the world although they differ greatly in terms of their levels of development. While Thailand is far ahead in both economic and human/social development indicators, Vietnam seems to be poised to move rapidly in its quest for high growth and low poverty rates. Cambodia and Laos are still struggling with a legacy of underdeveloped human resources, weak institutions and governance, and “structural” weaknesses (due to a narrow economic base and poor agricultural productivity). All these countries are “open” with a high trade/GDP ratio, and are keen to expand both bilateralism and regionalism, within the overall context of ASEAN and AFTA as well as the WTO. 

All four countries view cross border opportunities as being very important from their own perspective. Thailand looks at it from its larger vision of transforming itself as a regional economic hub through ‘open regionalism’, while Vietnam views cross border economic development as an important strategy of reaching out to remote, backward communities on the one hand, and good preparation for eventual WTO accession. It has undertaken an aggressive policy of creating border economic zones all along its borders. Cambodia and Laos are well aware of their strategic location between two powerhouses, Vietnam and Thailand, and keen to expand market access in the region—all the more urgent in the light of the withdrawal of garments quotas from January 2005. 

The four country case studies therefore represent how each country has responded to the new set of opportunities presented by more open borders. They also provide an insight into what kind of  benefits are likely to be generated. These studies are necessarily exploratory in nature given the relative paucity of analytical or descriptive work that is available in the subject. Nevertheless, they provide important insights into the nature of the cross border economy and the “structure, conduct, performance” of cross border trade across a diversity of economic and developmental landscapes. 

CDRI and the other DAN member research institutes hope that this publication will stimulate further research and encourage greater focus on issues relating to trade and economic cooperation and integration in the region. We would also like to express our thanks to the Rockefeller Foundation for the financial support that has made this work possible.