Analyzing the Determinants of Services Trade Flow between Vietnam and European Union: Gravity Model Approach

This paper aims at analyzing the determinants of services trade flows between Vietnam and 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 services trade, services exports and services imports between Vietnam and European Union separately. The estimated results on total services trade indicate that bilateral services trade flows between Vietnam and its European partner countries are mainly affected by GDP per capita gap between Vietnam and partner countries, population of partner countries, real effective exchange rate, colonial relationship and being former members of CMEA.