Abstract
This study was conducted to estimate the determinants as well as the efficiency of Vietnam’s footwear export to 50 trading partners by applying stochastic fronter gravity approach for the period 2001-2018. We found that Vietnam’s footwear export is positively affected by income measured by gross domestic product (GDP), border and landlock situation. The income elasticity of footwear export of Vietnam was about 1.2%. We also showed that the export efficiency of Vietnam’s footwear was not very high with the average ranges from 50.8% to 63.1%. The 10 most efficient countries were Cambodia, Panama, Slovakia, Belgium, Myanmar, Hongkong, Korea, Chile, the US and the Netherlands. We also found that 10 countries with the largest export potential were the US, China, Germany, Japan, Belgium, the UK, Netherlands, Korea, France, Canada. Regarding the determinants of export efficiency, the study provides evidence that trade freedom, financial freedom and importers’ population density positively contributed to efficiency. Our findings also support further integration of Vietnam since membership to many FTA enhances Vietnam’s footwear export efficiency. These FTAs include AFTA, Vietnam-Chile FTA, ASEAN-India FTA, ASEAN-Korean FTA, ASEAN-Japan FTA, ASEAN-China FTA, ASEAN-Australia-New Zealand FTA. Finally, the study recommends a relevant market policy for Vietnam’s footwear export in the coming years. We have provided 4 types of markets with different levels of priorities that Vietnam’s footwear exporters should focus on. The top footwear market priority should be countries with high potential yet low efficiency such as China, Russia, Brazil, Thailand, Sweden, Singapore and Australia.
Highlights
Footwear is one of the key export sectors Vietnam has comparative advantage for
We found that 10 countries with the largest export potential were the US, China, Germany, Japan, Belgium, the UK, Netherlands, Korea, France, Canada
This paper fills in the gap in the literature of stochastic gravity model for Vietnam aiming at estimating trade efficiency and the potential trade between Vietnam and its top 50 importers, and analyzing determinants of Vietnam’s footwear trade efficiency
Summary
Footwear is one of the key export sectors Vietnam has comparative advantage for. During the past 15 years, footwear has been in top five commodities that have the highest export value. In 2018, the export value of footwear sector was about 16.8 billion USD, accounting for 6.9% of Vietnam total export. With regards to world footwear export, Vietnam is always one of the top three countries having the highest footwear export value. From 2015 to 2018, Vietnam became the 2nd footwear exporting country in the world with the average export value of 14.49 billion USD/year. Identifying the potential value, trade efficiency (TE) as well as analyzing TE’s determinants that affect to Vietnam’s trade efficiency of footwear sector is very important. By using the stochastic gravity model, the paper aims to estimate trade efficiency and export potential for each partner in top 50 biggest importers of Vietnam’s footwear (total value export to these countries account for more than 99% of total export value of Vietnamese footwear).
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