International trade in travel of selected ASEAN nations from comparative advantage theory and value-added trade approach

Abstract

ASEAN nations are among few dynamic economies that experience impressive growth in international trade of travel even when the global economy is facing many shocks and negative changes. In recent years, travel is becoming the key sector and driver of economies thanks to its abundant natural and cultural resources. Nevertheless, comparative advantages for travel of certain nations are not creating adequate benefits to its potentials. The author argues that although some nations have a remarkable comparative advantage for travel development in the ASEAN region, their value added in international trade of travel is noticeably low compared to that of others for the last 5 years. This paper investigates the nature of international trade in travel of the selected ASEAN nations over the period 2014 - 2018 with an approach from the theory of comparative advantage and trade in value added by employing the Balassa methodology (using Revealed Comparative Advantage index) to measure comparative advantage in travel. The analysis indicates that different comparative composition of resources exploited for travel and tourism promotion result in different outcome value in international trade; thereby contributes to the evolvement of comparative advantage theory under current context of global trade in services.