Abstract
This paper examines the trade potential of climate smart goods (CSG) of Vietnam. In particular, the study employs gravity model with panel data for bilateral trade between Vietnam and its 45 partners from 2002 to 2013 with an objective of identifying the determinants explaining Vietnam's trade of climate smart products. The estimation results reveal that economic size, market size, distance, real exchange rate, border, and the quality of infrastructure of both Vietnam and its trading partners play a major role in bilateral trade of CSG. Additionally, the paper applies the method using speed of convergence and the estimated gravity equation to answer whether Vietnam has fully realized the potential trade of CSG. Accordingly, Vietnam has strong opportunity for trade expansion with 19 out of 45 countries in the scope of this paper.
Highlights
The linkage between economic growth and environmental degradation has been well discussed in a large body of literature
The increase in gross domestic product (GDP) reveals that these countries are able to produce larger amount of climate smart goods (CSG) for exports to Dependent variable: LnTRADEijt Explanatory variable Coefficients Std
By applying the gravity model for bilateral trade data of climate smart goods between Vietnam and 45 trading partners in the period 2002-2013, this paper identifies the main factors explaining trade of CSG including economic size, market size of partner countries, distance, real exchange rate, border, the quality of infrastructure of both Vietnam and its partners
Summary
The linkage between economic growth and environmental degradation has been well discussed in a large body of literature. Economic growth has always been the prior development goal in many countries with an objective of making progress in people’s living standards. The rapid increase in per capita income is associated with negative effects on global environment. It is clear from scientific evidence that rapid internationalization of production and service activities is attributed to sharp expansion of fossil fuel-intensive production and cargo transportation (Mathur, 2014), leading to increasing global greenhouse gas (GHG) emissions into the atmosphere. The fast growth in economic activities accelerates climate change and its impacts. Environmental degradation and climate change are emerging as key challenges facing Vietnam to maintain its rapid economic growth in a sustainable manner (ADB, 2013)
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