Analysis of Cross Border Trade between Regency of North Central Timor and Enclave District of Oekusi (Timor Leste)

Cross border trade is a trading activity performed by community residing in border area of neighboring countries. The regency of North Central Timor is a region with direct land border with Timor Leste particularly enclave district of Oekusi. Post Timor Leste’s independence, cross border trade is unavoidable. This research was conducted in border area of North Central Timor Regency particularly in 6 (six) districts which bordered with enclave district of Oekusi. Data analysis being used was Structural Equation ModelingPartial Least Square (SEM-PLS). From the result of data analysis, it was found that social capital has positive effect directly towards entrepreneurship and cross border trade, institutional changes has positive and significant effect directly towards entrepreneurship, and has positive and insignificant effect towards cross border trade, entrepreneurship has positive and significant effect directly towards prosperity. Social capital has positive and significant effect indirectly towards cross border trade through entrepreneurship and has positive and significant effect towards prosperity through cross border trade. Institutional changes has positive and significant effect indirectly towards cross border trade through entrepreneurship and has positive and significant effect toward prosperity through cross border trade, entrepreneurship has positive and significant effect indirectly towards prosperity through cross border trade.