MEASURING THE EFFECTIVE RATE OF PROTECTION IN VIETNAM’S ECONOMY WITH EMPHASIS ON THE MANUFACTURING INDUSTRY: AN INPUT-OUTPUT APPROACH

In recent years, Vietnam has modernized its economic policies. Positive results include an economic growth rate averaging more than 7% per annum, increased foreign investment and improved living standards for its citizens. Having moved from a traditional socialist model to a market-based system, trade is now a major economic priority of the Vietnamese Government. The study is a contribution to a new line of trade theory arguing that good trade policy depends on many factors. By using effective rate of protection (ERP) concept, the study provides analysis of the current tariff structure from 2005 to 2009 in order to estimate the structural change of ERP by goods sectors, and the impact of trade barriers (through tariff) on the Vietnam’s economy. Vietnam’s 2007 competitive and non-competitive input-output tables are the main database used. Economic indicators like ERP, OM (output multipliers) and BL (backward linkage) calculated from the I/O model are used to assess the effectiveness of industries. The relevant policies on trade Vietnam are then suggested.