Analysis of the factors affecting Vietnam's exports to the EU market

Abstract

The paper uses the gravity model and panel data to examine the determinants of Vietnam's export to the EU market during the 2007-2017 period. Vietnam is an export-oriented economy. In the context of international economic integration, Vietnam is one of the countries with a very high export growth rate. With a GDP of 18.82 trillion USD, a population of 512 million people (2017), the European Union (EU) is the world's largest economy and is Vietnam's second largest commodity import market. As a result, the urgent requirement from practice is to identify and quantify the factors affecting Vietnam's exports to the EU market and on that basis to give appropriate policy implications to boost exports to increase export turnover and gradually improve the economy. The article uses the Hausman-Taylor estimator for the optimal combination of Fixed-Effects (FE) and Random-Effects (RE) methods. The estimation results indicate that the determinants of Vietnam's export to the EU market include: aggregate population; aggregate GDP per capita; Vietnam's index of infrastructure and aggregate trade openness. Based on these findings, the paper suggests policies to boost Vietnam's export to the EU.