International Export Flows of Vietnam :A Gravity Model Approach

ABSTRACT:What determines export pattern of Vietnam with its trading partners? The author has employedthe gravity model showing one-way exports of Vietnam to the world between 1997 and 2009.Since no proof was found of a possible endogeneity problem, the Hausman-Taylor methodologyis therefore an inappropriate solution and the fixed effect model is consequently preferable. Therole of the economic size indicator reaffirms its high relevance to export trade. Thegeographical distance gives an insignificantly negative sign suggesting that trade barrier needsto be examined in the context of Vietnam' s trading with the rest of the world. ASEAN as aregional economic integration organization plays a positive role therefore constitutes asignificant absorptive factor. Interestingly, high labor productivity importing countries tend tohave a lower demand for export products from Vietnam and the CPI - a proxy for themultilateral resistance factor is positive in respect of export trade.