Analyzing the Determinants of Service Trade Flows Between Vietnam and the European Union: A Gravity Model Approach
Main Article Content
Abstract
Abstract: This paper analyzes the determinants of service trade flows between Vietnam and the European Union. In this respect, a gravity model has been estimated with panel data and pooled, random and fixed effect estimation, covering the period of ten years from 2002 to 2011, for total service trade flows, service exports, and service imports between Vietnam and the European Union separately. The estimated results indicate that the service trade flows between Vietnam and its European partner countries are determined by the GDP per capita gap between Vietnam and EU countries, the population of EU countries, the real effective exchange rates, colonial relationship and being former members of the Council of Mutual Economic Assistance.
Keywords: Gravity model, service trade, Vietnam, EU.
References
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Lee, S. Y., Jun, S. H. and Kim, D., Does the Linder Hypothesis Hodl for Servie Trade? Do Countries of Similar Incomes Trade more with Each Other for Service Trade? East-West Center, 2012.
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[3] GSO, Imports of goods by regions, group country, country and territory. Statistical data. Hanoi, Vietnam: General Statistical Officce of Vietnam, 2014c.
[4] Timbergen, J., Shaping the World Economy: Suggestions for an International Economic Policy, New York: The Twentieth Century Fund, 1962.
[5] Anderson, J. E., A Theorical Foundation for the Gravity Equation. American Economic Review 69 (1979) 1, 106-116.
[6] Bergstrand, J., The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence, The Review of Economics and Statistics 67 (1985), 474-481.
[7] Helpman, E., and P. Krugman, “Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition and the International Economy”, MIT Press, 1985.
[8] Deardorff, V. A., “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?”, The Regionalization of Economy, 1998.
[9] Eaton, J., and S. Kortum, “Technology, Geography, and Trade”, Econometrica 70 (2002) 5, 1741-1779.
[10] Helpman, E., M. Melitz and Y. Rubinstein, “Trading Partners and Trade Volumes”, Quarterly Journal of Economics 123 (2008), 441.
[11] Chaney, T., “Distorted Gravity: The Intensive and Extensive Margin of International Trade”, American Economic Review 98 (2008), 1707.
[12] Francois, J., The next WTO Round: North - South Stakes in New Markets Access Negotiations, Adelaide: Centre for International Economics Studies, 2001.
[13] Park, S. C., “Measuring Tariff Equivalents in Cross-Border Trade in Services”, Korea Institute for International Economic Policy Working Paper 2, 2002.
[14] Grunfeld, L. A. and A. Moxnes, “The Intangible Globalization: Explaining the Patterns of International Trade in Services”, Discussion Paper, 2003, 657.
[15] Kimura, F., and H. H. Lee, The Gravity Equation in International Trade in Services, European Trade Study Group Conference, University of Nottingham, 2004.
[16] Lejour, A. and J. de P. Verheijden, “Services Trade with Canada and the European Union”, CPB Discussion Paper, 2004, 42.
[17] Mirza, D., and G. Nicoletti, “What is so Special about Trade in Services?”, Research Paper 2004.
[18] Kox, H. and A. Lejour, “Regulatory Heterogeneity as Obstacle for International Services Trade”, CPB Discussion Paper, 2005, 49.
[19] Lennon, C., Trade in Services and Trade in Goods: Differences and Complemetarities, Conference of the European Trade Study Group, Vienna, 2006.
[20] Walsh, K., “Trade in Servies: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade”, IIIS Discussion Paper 183, 2006.
[21] Do, Tri Thai, A Gravity Model for Trade between Vietnam and Twenty-three European Countries, Department of Economics and Society, 2006.
[22] Nguyen Xuan Bac, “The Determinants of Vietnamese Export Flow: Static and Dynamic Panel Gravity Approaches”, International Journal of Economics and Finance 2 (2010) 4.
[23] Dinh Thi Thanh Binh, Nguyen Viet Duong and Hoang Manh Cuong, Applying Gravity Model to Analyze Trade Activities of Vietnam, 2011.
Lee, S. Y., Jun, S. H. and Kim, D., Does the Linder Hypothesis Hodl for Servie Trade? Do Countries of Similar Incomes Trade more with Each Other for Service Trade? East-West Center, 2012.