Assessing the Impact of Deeper Trade Reform in Vietnam Using a General Equilibrium Framework

Thu, To Minh; Lee, Hiro

doi:10.1355/ae32-1h

Cited by 10 publications

(8 citation statements)

References 19 publications

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“…Similarly, Frensch (2010) also found out that trade liberalization helps emerging economies to be successfully involved in import-led growth strategies, which leads to rapid economic growth. While, Thu and Lee (2015) also supported this view by revealing that trade liberalization has a strong positive impact on total output, exports, and imports in Vietnam.…”

Section: Literature Reviewmentioning

confidence: 83%

Trade Liberalization and Performance of the Nigerian Textile Industry

Okeowo

Aregbeshola

2018

JEBS

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Nigeria textile industry is characterized by questionable incentives, political uncertainty, acute power shortage, poor infrastructure, smuggling and red-tape bureaucracy, among others. The study modified the endogenous growth model within a time series (1986 and 2015) estimation techniques of Autoregressive Distributed Lagged model (ARDL). Findings revealed that the effect of simple tariff rate on textile industry is negative and statistically significant in the long-run; while trade liberalization policy measure through simple tariff rate has a lag effect before it can be effective in the textile industry. In both short and long run, real effective exchange rate depreciation worsens the performance of the textile industry in Nigeria. In the long run, a 1.0% rise in trade openness would decrease the level of textile industry performance by about 17.49%, while factor affecting textile industry performance in the short run are simple tariff rate, financial development, exchange rate changes, trade openness and labor and capital inputs respectively. The study concluded that Trade liberalization has a lag effect on textile industry performance and a significant effect on the performance of the Nigerian textile industry. It is therefore recommended that government should make concerted efforts toward providing a favorable business environment, reducing inflation and improve the infrastructural facilities for the textile industry to strive.

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Section: Literature Reviewmentioning

confidence: 83%

Trade Liberalization and Performance of the Nigerian Textile Industry

Okeowo

Aregbeshola

2018

JEBS

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“…Instead of employing a static CGE model, Thu and Lee (2015) employed a dynamic CGE model to study the effect of trade reform on economic welfare. They considered the impact of goods and services under trade liberalization, which included reducing tariffs and introducing reforms in other trade-related areas.…”

Section: Literature Review and Theoretical Frameworkmentioning

confidence: 99%

Impact of removing industrial tariffs under the European–Vietnam free trade agreement

Phat

Hanh

2019

JED

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Purpose The purpose of this paper is to employ the computable general equilibrium (CGE) approach to examine how the European–Vietnam Free Trade Agreement (EVFTA) impacts on the Vietnamese economy in the case of the removal of industrial tariffs. Design/methodology/approach The authors construct a social accounting matrix based on the latest data of the Vietnam input-output Table for the year 2012 and then apply the CGE model to simulate the economic scenarios when the tariff rate of the industrial sector reduces to 0 percent. Findings The first simulation results demonstrate that the elimination of tariffs in the industrial sector will lead to a 9.13 percent increase in household consumption, together with an increase in the factors of production of the agricultural, industrial and service sectors by 9.61, 9.74 and 8.21 percent, respectively. The EVFTA also causes a deficit in the trade balance because the value of imports increases by 12.54 percent, while exports’ value slightly increases by 2.71 percent. Furthermore, there has been a drop of 2.29 percent in the total government income; nevertheless, social welfare witnesses a gain of 9.13 percent. The second scenario simulation draws crucial attention to policymakers that a small fluctuation in the production tax rate will cause a significant change in the economy. Practical implications The reduction of tariff in the industrial sector will increase the social welfare and strengthen the whole economy regarding the growth of household consumption, factors of production and trade value. On the unfavorable side, the EVFTA causes a national budget deficit and puts pressure on domestic production. This paper is a valuable reference for governments and policymakers when they decide to reduce tariffs or adjust production taxes once Vietnam integrates into the world economy. Originality/value This study differs from previous research works by utilizing a static CGE model to investigate the impact of removing the industrial tariff on the economy under EVFTA.

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“…Firstly, according to To and Lee (2015), who did the research about Vietnam economic policies, Vietnam implemented a deeper trade liberalization by reducing administrative and technical barriers to trade, cutting off tariffs, the transport and trade margins, and attracting more foreign direct investment. As a result, it is expected that total trade volume will increase significantly (To and Lee, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Evaluation of the Trade Relationship Between Vietnam and China; Vietnam and United States: A Comparison Using Gravity Model

Dinh¹

2017

EJEF

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This study aims to evaluate the determinants of trade relationship between two largest trading partners of Vietnam, United States and China. Using gravity model for time series data from 1986 to 2015, the study found that economic growth rate plays a crucial role in stimulating the trade flow. Both trade relationships fit with the practical approach of Heckscher-Ohlin theory, stating that trade flow increases between countries with different income levels. The most important finding of this study lines on the results regarding the impact of trade agreements. While United States-Vietnam bilateral agreement creates trade, the trade agreement between ASEAN and China produced trade diversion. As China expands its markets among ASEAN countries, Vietnam should diversify its export markets to improve its export flow.

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Assessing the Impact of Deeper Trade Reform in Vietnam Using a General Equilibrium Framework

Cited by 10 publications

References 19 publications

Trade Liberalization and Performance of the Nigerian Textile Industry

Trade Liberalization and Performance of the Nigerian Textile Industry

Impact of removing industrial tariffs under the European–Vietnam free trade agreement

Evaluation of the Trade Relationship Between Vietnam and China; Vietnam and United States: A Comparison Using Gravity Model

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