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The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam

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  • Duc Anh Dang

    (National Centre for Socioeconomic Information and Forecast, Viet Nam)

  • Vuong Anh Dang

    (National Centre for Social and Economic Modelling University of Canberra, Australia)

Abstract

Sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) in destination markets may affect firms’ performance. In this paper, we examine how meeting foreign standards affects exporting firms’ innovation, reflected in the product quality, production processes, skills, and technological acquisition. The analysis relies on official regulations on non-tariff measures released by the United Nations Conference on Trade and Development (UNCTAD) and panel data for manufacturing firms in Viet Nam during 2013–2015. To correct for the potential endogeneity of SPS measures and TBTs and measurement errors, we use the number of SPS measures and TBTs imposed on other Association of Southeast Asian Nations (ASEAN) Member States as an instrument variable. Our results indicate that a higher number of SPS measures and TBTs applied by destination countries increases the probability of Vietnamese exporting firms’ skill acquisition. SPS measures also have higher positive impacts on product quality improvement and skill acquisition in the food processing sector. The SPS measures and TBTs have larger impacts on small firms than large firms. Foreign firms tend to acquire more technology and skills than domestic firms when facing SPS measures and TBTs by importing countries. Higher SPS measures and TBTs have more effects on the probability of acquiring skills by state-owned firms. However, the propensity of product quality and technological acquisition of non-state firms is much higher than that of state-owned firms when facing a greater level of SPS measures and TBTs.

Suggested Citation

  • Duc Anh Dang & Vuong Anh Dang, 2021. "The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam," Working Papers DP-2021-16, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2021-16
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    References listed on IDEAS

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    More about this item

    Keywords

    trade; non-tariff measures; innovation;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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