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Trade efficiency, free trade agreements and rules of origin

Author

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  • Doan, Thang N.
  • Xing, Yuqing

Abstract

This study uses a stochastic gravity model to estimate efficiency levels of Vietnam’s exports with its major trading partners. Export efficiency is defined as the ratio of actual exports to the maximum possible volume. In addition, the study investigates the impact of Free Trade Agreements (FTAs) and rules of origin on export efficiency, focusing on Vietnam’s exports to its major trading partners during the period 1995–2013. The empirical results suggest that the volume of Vietnam’s actual exports is far below the estimated efficient level, and that there is considerable room for increasing Vietnam’s exports. Membership in ASEAN contributed positively to the country’s trade efficiency while rules of origin and non-membership in EU and NAFTA had a negative impact. Those findings imply that Vietnam should enter more FTAs with trading partners and adopt lenient rules of origin in FTA negotiations; and that attracting export-oriented FDI and improving the mix of exports could enhance the country’s trade efficiency substantially.

Suggested Citation

  • Doan, Thang N. & Xing, Yuqing, 2018. "Trade efficiency, free trade agreements and rules of origin," Journal of Asian Economics, Elsevier, vol. 55(C), pages 33-41.
    • Handle: RePEc:eee:asieco:v:55:y:2018:i:c:p:33-41
    DOI: 10.1016/j.asieco.2017.12.007
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    Cited by:

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    2. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    3. Tanaka, Kiyoyasu & Fukunishi, Takahiro, 2022. "Rules of origin and exports in developing economies: The case of garment products," Journal of Asian Economics, Elsevier, vol. 82(C).
    4. Fabiola Cruz Navarro-Soto & Elsa-Sofia Morote & Roberto Macha-Huamán & Enzo Arnold Saavedra-Soplín, 2023. "Determinants of Peruvian Export Efficiency: Poisson PML Estimation Approach," Economies, MDPI, vol. 11(6), pages 1-20, June.
    5. Doanh Khanh Nguyen & Van Ngoc Thi Pham & Heo, Yoon, 2019. "Impact of institutional and cultural distance on ASEAN's trade efficiency," Economics Discussion Papers 2019-57, Kiel Institute for the World Economy (IfW Kiel).
    6. Paitoon Chetthamrongchai & Kittisak Jermsittiparsert & Sakapas Saengchai, 2020. "How the nexus among the free trade, institutional quality and economic growth ffect the trade from ASEAN countries," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(3), pages 2079-2094, March.

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    More about this item

    Keywords

    FTA; Rules of origin; Trade efficiency;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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