Abstract

Cross-border trade is categorized as international trade but its approach relies on government policy. Cross-border trade in communities in the border region of Timor Tengah Utara district and district of Oekusi of Timor Leste due to the social capital, and institutional change.The purpose of this study was to determine the impact of cross-border trade on institutional change. This research was conducted in the border regionby involving traders. The results of data analysis using smartPLS show that cross-border trade has no direct impact on institutional change, and will change when mediated by ease of accessibility. The accessibility of the community will facilitate trade between communities due to the proximity of the settlement, the availability of transportation and the topography of the area which is only limited by highways, gardens and tributaries. Factors of ease of access cause changes in institutions through changing community behavior, patterns of interaction with government pushes to provide ease of regulation.