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The ASEAN Free Trade Agreement and Vietnam’s Trade Efficiency

Author

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  • Hai Nguyen
  • Thang Doan

Abstract

This study employs a stochastic gravity model to estimate the 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 ASEAN Free Trade Agreement membership has, in general, improved the trade efficiency, whereas tariffs and domestic devaluation have impaired it. Our findings lead to the recommendation that Vietnam should join more Free Trade Agreements and break down the man-made barriers.

Suggested Citation

  • Hai Nguyen & Thang Doan, 2017. "The ASEAN Free Trade Agreement and Vietnam’s Trade Efficiency," Asian Social Science, Canadian Center of Science and Education, vol. 13(4), pages 192-192, April.
    • Handle: RePEc:ibn:assjnl:v:13:y:2017:i:4:p:192
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    References listed on IDEAS

    as
    1. Shiro Armstrong, 2007. "Measuring Trade and Trade Potential: A Survey," Asia Pacific Economic Papers 368, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    2. Vo Tri THANH & Nguyen Anh DUONG, 2011. "Revisiting Exports and Foreign Direct Investment in Vietnam," Asian Economic Policy Review, Japan Center for Economic Research, vol. 6(1), pages 112-131, June.
    3. Narayan, Seema & Nguyen, Tri Tung, 2016. "Does the trade gravity model depend on trading partners? Some evidence from Vietnam and her 54 trading partners," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 220-237.
    4. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation," Journal of International Economics, Elsevier, vol. 77(1), pages 77-85, February.
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    Cited by:

    1. Ramlawati Ramlawati & Aditya Halim Perdana Kusuma Putra, 2018. "Total Quality Management as the Key of the Company to Gain the Competitiveness, Performance Achievement and Consumer Satisfaction," International Review of Management and Marketing, Econjournals, vol. 8(5), pages 60-69.
    2. Memduh Alper Demir & Mustafa Bilik & Utku Utkulu, 2017. "The Impact of Competitiveness on Trade Efficiency: The Asian Experience by Using the Stochastic Frontier Gravity Model," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(4), pages 1-15.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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