Untapped potential and high-tech trade

Abstract

This study aims to quantify the impact of untapped export potential on ASEAN-6 countries’ high-tech exports for the 2006-2016 period. Our innovative aspect sheds new light on the relationship between the untapped export potential in the previous year and export performance in the current year. Using a system GMM estimator, we found several significant results. Firstly, untapped export potential in the last year has a positive impact on ASEAN-6 countries' high-tech exports in the current year. Secondly, the effect of untapped export potential on ASEAN-6 countries' high-tech exports depends on supply competencies (ASEAN-6 countries' human capital and research and development capability) and the bilateral linkage (importing countries' trade barriers and institutional similarity between ASEAN-6 countries and importing countries). Thirdly, supply competencies are the most important when ASEAN-6 countries export high-tech goods to high-income countries. In contrast, the bilateral linkage is the most crucial when ASEAN-6 countries ship high-tech products to low-income countries. Measures to enhance human capital, upgrade research and development capability, promote trade liberalization, and minimize the institutional distance with the trading partners are the remedy for ASEAN-6 countries to tap the untapped potential.