Enhancing Trade Facilitation to Boost Manufactured Goods Trade in Vietnam: A Case Study of a Transition Economy

This study examines the important role of trade facilitation in boosting the trade of manufactured goods in Vietnam, a transition economy, from 2016 to 2022. Through comprehensive policy reforms and the adoption of digitalization, Vietnam has significantly streamlined its trade processes, leading to substantial growth in both the export and import of manufactured goods, particularly in the electronics sector. Utilizing a partial equilibrium gravity model, the research analyzes the impact of trade facilitation on Vietnam's trade flows and finds a strong positive correlation between Vietnam’s GDP, trade facilitation measures, and the overall trade of manufactured goods. Beyond aggregate trade data, the study also reveals sector-specific impacts, demonstrating that simplifying customs procedures has been particularly beneficial for the electronics sector due to its reliance on just-in-time supply chains. Four key groups of trade facilitation measures are identified, each showing distinct impacts: simplifying customs procedures (EASYij), enhancing the capacity of trade management agencies (ENHANCEij), improving dialogue and coordination (DIALOGij), and modernizing trade processes (MODERNIZATIONij). The results provide valuable insights for other transition economies seeking to enhance trade performance in the manufacturing sector. By implementing sector-specific policy reforms, strengthening trade management capacity, embracing digital trade solutions, and promoting stakeholder collaboration, transition economies can leverage trade facilitation as a powerful driver of economic growth and development.