The Asean Free Trade Agreement and Vietnam’s Trade Efficiency

Thi Hong Nguyen Hai and Ngoc Doan Thang
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Thi Hong Nguyen Hai: International Business Faculty, Banking Academy of Vietnam, Hanoi, Vietnam
Ngoc Doan Thang: International Business Faculty, Banking Academy of Vietnam, Hanoi, Vietnam

Review of Business and Economics Studies, 2017, issue 1, 60-69

Abstract: This study employs a stochastic gravity model to estimate efficiency performance of Vietnam’s trade with its main trading partners from 1995–2015. Trade efficiency is measured as the ratio of actual trade volume to the maximum likelihood. Moreover, it analyzes the effects of both natural and man-made trade barriers on trade efficiency. The empirical results suggest that the actual trade of Vietnam appears to be much smaller than a possible efficiency level and that there is large space for further progress. Export efficiency outweighs that of import. Vietnam’s AFTA membership has in general improved the trade efficiency, whereas tariffs and domestic devaluation downgrade it. Our findings lead to the recommendation that Vietnam should join more Free Trade Agreements (FATs) and eradicate the man-made barriers.

Keywords: FTA; trade efficiency; trade barriers (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:scn:031730:17011630

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