Determinants of bilateral trade flows of Vietnam: evidence from panel fixed effects estimation approaches

Abstract

This study aims to investigate the determinants of bilateral trade flows of Vietnam. The panel fixed effects estimation using Driscoll and Kraay standard errors and panel fixed effects two-stage least squares approach are employed to analyze a balanced panel data, which includes fifty-three countries that have been continuously trading with Vietnam from 1997 to 2019. The estimated results reveal that free trade agreements have a positive effect on the bilateral trade flows whether in case of trading with the developed or developing countries. Additionally, the bilateral trade flows between Vietnam and the developed countries are enhanced by the difference in income level. They are, however, impeded by the institutional distance and transportation cost. In case of trading with the developing countries, transportation cost and exchange rate have a positive impact on the bilateral trade flows. Our study provides some crucial policy implications for policymakers involving international trading activities in the developing countries such as Vietnam.

Effects of logistics performance on Vietnam’s exports: a quantitative analysis using the PPML method

“…Because the only exporter in this study is Vietnam, the only three countries with shared borders are China, Laos, and Cambodia. Following the previous empirical studies of Vietnam's exports (Huynh, 2021;Le, 2021;Le, 2022;Le, 2023;Le and Nguyen, 2022), we specify a dummy variable of regional trade agreement, denoted by RTA ij,t . It equals 1 if both trading countries i and j are members of a regional trade agreement in year t, and 0 otherwise.…”

“…Particularly, data on LPI is only available in 2007 and biennial from 2010 to 2018. In this study, our approach is to gather all available trade data in contrast with the previous studies (Huynh, 2021;Le, 2021;Le, 2022;Le, 2023;Le and Nguyen, 2022;Tran et al, 2023) that only covered smaller collections of trading countries with Vietnam. Regarding control variables, we obtain GDP data from the WB's World Development Indicators (WDI), geographical distance from CEPII, and regional trade agreements from WTO.…”