International trade is defined as the exchange of capital, goods, and services between countries, which would involve the activities of the government and individual. This type of trade gives upswing to a world economy, in which supply and demand or prices, affect and are affected by global events. Consumers and countries have the opportunity to be exposed to goods and services not available in their own countries through the trading globally. Export is a product that sold to the global market, while the import is bought from the global market. In most countries, international trade represents an important share of gross domestic product (GDP).
One of the Asian economies most open to international trade is Vietnam and it has been currently …show more content…
It has been accounting for some 80% of the annual volume of exports. Nevertheless, high income countries remain important to Vietnamese export trade. However, the augmented gravity model highlights the fact that high-labor productivity countries are not significant to Vietnam’s export trade. They suggest that Vietnam can continue to use its low labor cost advantage.
From previous literature on Vietnamese trade shows although the sign is negative, geographical distance is shown not to be a good proxy for trade cost. To overcome this problem, the author suggests using the CPI of importing countries as a proxy for the multilateral resistance factor. The CPI acts as a stimulus on imports from Vietnam has a positive effect. The positive ASEAN sign emphasizes the role of regional economic integration where tax cuts help to encourage imports by the ASEAN countries from Vietnam.
Export pattern of Vietnam cannot be confirmed the role of firms or export products on international markets although the result fit well with the export data. They expected that export volume by firm or product categories would be integrated into the gravity model if firm or product level data becomes publicly …show more content…
During the period of 1995-2009, the exports hit a high average level. However, Vietnam's export growth was only high when the country is experiencing the fast economic integration. This indicates that the proactive international economic integration and how the process interacts play an important role to Vietnam's economy. Although the share of labor and resource intensive products remains high, the export structure still shows positive shifts, with share of processed products rise.
Vietnam's exports different aligned with the world trade, and the world trade growth is proved to be vitally encourage the expansion of exports. The export products of Vietnam penetrate better in the high-income markets such as Japan, the USA and Korea. This is because of the better competitiveness and higher harmonization of those products to the import demand of its trading partners other than the better market access. The dynamic comparative advantage became increasingly evident no matter in some of the