Research purpose To analyze the current situation of the Vietnam – Korea commodity trade structure in the period 2001 - 2016; thereby, identifying results, limitations and problems, as
Trang 1TRUONG QUANG HOAN
VIETNAM-KOREA COMMODITY TRADE STRUCTURE OVER THE PERIOD 2001-2016:
ISSUES AND SOLUTIONS
Major: International Economics
Major Code: 9 31 01 06
SUMMARY OF PHD THESIS IN ECONOMICS
Hanoi - 2019
Trang 2Graduate Academy of Social Sciences Vietnam Academy of Social Sciences
Supervisors:
1 Assoc Prof Dr Nguyen Duy Dung
2 Assoc Prof Dr Nguyen Huy Hoang
Reviewers:
Reviewer 1: Assoc Prof Dr Ha Van Hoi
Reviewer 2: Assoc Prof Dr Do Huong Lan
Reviewer 3: Assoc Prof Dr Tran Thi Lan Huong
The PhD Thesis is defended at the PhD Thesis Evaluation Council, Graduate Academy of Social Sciences, No 477 Nguyen Trai Street, Thanh Xuan District, Hanoi
Available at:
- National Library of Vietnam
- Library of Graduate Academy of Social Sciences
Trang 3INTRODUCTION
1 The importance of the thesis subject
The rapid growth in commodity trade exchange between Vietnam and South Korea (hereafter Korea) since the two sides established the Comprehensive Partnership relation in 2001 has helped Vietnam and Korea become important trading partners to each other’s
However, the commodity trade structure between Vietnam and Korea over the years has revealed many noticeable issues Vietnam has always experienced trade deficit with Korea Especially the deficit has tended to rapidly increase in recent years Vietnam’s exports to Korea are mainly raw materials, or processed and manufactured goods with low technological content Additionally, Vietnam has not exploited comparative advantages, incentives from regional liberalization, economic integration and growth in attracting foreign direct investment (FDI) to basically improve the trade structure with Korea in a positive manner
Many existing studies have mentioned Vietnam-Korea economic relations, but still lacked deep and comprehensive works on the Vietnam - Korea commodity trade structure In fact, along with the important role and position of Vietnam-Korea trade for each country, there are many issues between Vietnam and Korea to consider regarding economic relations as the whole and trade relations in particular now and in the coming time In such a context, it would be necessary to have in-depth and comprehensive studies on the Vietnam-Korea commodity trade structure to identify, evaluate the results and the issues; thereby providing feasible orientations and solutions to improve the Vietnam-Korea commodity trade structure in next years
Trang 42 Research purpose and research task of the thesis
2.1 Research purpose
To analyze the current situation of the Vietnam – Korea commodity trade structure in the period 2001 - 2016; thereby, identifying results, limitations and problems, as well as proposing solutions to improve the Vietnam – Korea commodity trade structure
in the coming years
(iii) Proposing solutions to improve the Vietnam – Korea commodity trade structure in the coming years
3) What are the orientations and solutions to improve the Vietnam - Korea commodity trade structure in the coming time?
3 Research object and scope of the thesis
3.1 Research object
Vietnam-Korea commodity trade structure over the period 2001-2016
Trang 53.2 Scope of research
About space: Vietnam, Korea and some East Asian countries About time: the 2001 - 2016 period
About content: trade in goods; direct trade between Vietnam and
Korea, commodity export structure, commodity import structure
4 Methodology and research method of the thesis
4.1 Methodology
The thesis uses dialectical materialism, historical materialism as well as economic theories to explain the changes that have taken place in the Vietnam – Korea commodity trade structure over 2001-
2016 period
4.2 Research method
The thesis employs trade pattern indices including trade complementary index (TCI); trade intensity index (TII); export concentration index (HHI); intra-industry trade index (IIT); export product sophistication index (EXPY); and the normalized revealed comparative advantage index (NRCA) The thesis also uses the methods of classifying international goods according to the import-export industry; technological content; factor intensity and stages of production Finally, the thesis employs OECD’s database of trade in value added (TiVA)
5 New scientific contribution of the thesis
Firstly, the thesis clarifies theoretical basis for bilateral
commodity trade structure, thereby providing an analytical framework for researching the Vietnam - Korea commodity trade
structure; Secondly, the thesis clarifies the situation, results and issues
in the Vietnam - Korea commodity trade structure; Thirdly, the thesis
proposes solutions to improve the Vietnam – Korea commodity trade structure in the coming time
Trang 66 Theoretical and practical meaning
Theoretically, the thesis adds and completes the general
analytical framework on bilateral commodity trade structure Thesis’ results provide additional evidence on the shift and its determinants
on trade structure between a developing economy (Vietnam) and a
developed economy (Korea) Practically, thesis’ analyses and
proposed solutions can be the useful reference channel for relevant Vietnamese organizations in developing appropriate strategies and measures to enhance trade relations with Korea in future
Chapter 3: Research method for bilateral commodity trade structure
Chapter 4: Current situation of Vietnam-Korea bilateral commodity trade structure in the period 2001 - 2016
Chapter 5: Orientations and solutions to improve the Vietnam - Korea bilateral trade structure
Chapter 1 OVERVIEW OF LITERARURE RELATED TO THE
THESIS THEME
1.1 Studies related to the theoretical basis of commodity trade
Typical studies include: Lall (2000), “The technological structure and performance of developing country manufactured exports, 1985‐98”; Gaulier, Lemoine and Ünal-Kesenci (2007),
Trang 7“China’s integration in East Asia: Production sharing, FDI & tech trade”; Hinloopen and van Marrewijk (2008), “Empirical Relevance of the Hillman Condition for Revealed Comparative Advantage: 10 Stylized Facts”; Hanson (2010), “Sources of export growth in developing countries”; Hirschman (1964), “The paternity
high-of an index”; Balassa (1965), “Trade liberalisation and “revealed” comparative advantage”; Laursen (2000), “Trade specialisation, technology and economic growth: Theory and evidence from advanced countries”; Grubel and Lloyd (1975), “Intra-industry trade: the theory and measurement of international trade in differentiated products”; Michaely (1996), “Trade preferential agreements in Latin America: an ex-ante assessment”; Hausmann, Hwang and Rodrik (2006), “What you export matters”
1.2 The studies on Vietnam-Korea trade as part of general relationship between the two countries or at the wider scope
Typical studies include: Ngo Xuan Binh (2013), Korea relations in the new international context”; Nguyen Hoang Giap, Nguyen Thi Que and Nguyen Van Duong (2011), “Vietnam-Korea relations from 1992 to now and development prospects until 2020”; Le (2007), “ASEAN-Korea co-operation in the development
“Vietnam-of new ASEAN members”; and Steinberg (2010), “Korea’s Changing Roles in Southeast Asia: Expanding influence and relations”
1.3 In-depth studies on Vietnam-Korea trade relations
Notable studies include: Nguyen Hong Nhung and Chu Thang Trung (2005), “The reality of Vietnam - Korea trade relations”; Ngo Xuan Binh and Dang Khanh Toan (2010), “Promoting economic relations between Vietnam and Korea”; Nguyen Khanh Doanh (2011), “Vietnam - Korea trade relations: Prospects and solutions”; Nguyen Tien Dung (2011), “The impact of ASEAN-Korea free trade area on Vietnam’s trade”; MUTRAP (2011), “Assessing the impact
Trang 8of ASEAN-Korea Free Trade Agreement on Vietnam’s economy”; Phan and Ji (2012), “An Analysis of Korea-Vietnam Bilateral Trade Relation”; Phan and Ji (2016), “Potential Economic Impacts of the Vietnam - Korea Free Trade Agreement on Vietnam”
1.4 Other in-depth studies on commodity trade
Notable studies include: Nguyen Chien Thang and Tran Van Hoang (2015), “Vietnam’s trade structure: Long-term challenges”; Truong (2016), “Technological Structure in Vietnam - Thailand bilateral trade relations”; PhD thesis of Nguyen Thi Minh Huong (2012), “Structure of Vietnam - Japan commodity trade in the 2001-
2010 period”; Vo Thy Trang (2016), “Factors affecting internal trade
in agricultural products between Vietnam and APEC”; Vu Thanh Huong (2016) “Vietnam - EU Free Trade Agreement: Impact on trade
in goods between the two sides and implications for Vietnam”
1.5 General assessments and issues the thesis focusing on
Firstly, most studies in Vietnam have used a statistically descriptive approach; Secondly, foreign studies have had more in-
depth analysis of relations and trade structure between Vietnam and Korea, between ASEAN and Korea However, the aspects related to dynamic comparative advantage, value added, the sophistication of export products, context analysis and recommendations have not been addressed specifically and comprehensively
Inheriting the existing research works, the thesis focuses on solving the following contents: systematizing and building the theoretical basis; formulating and applying analytical framework and research methods to analyze and evaluate the Vietnam - Korea bilateral commodity trade structure in the 2001 - 2016 period; thereby, clarifying the results, problems and causes, as well as proposing solutions to improve
Trang 9Chapter 2 THEORETICAL BASIS FOR BILATERAL COMMODITY
- The commodity trade structure: is the total value of goods constituting a country’s trade; those parts are intertwined, interacting with each other and are consistent with certain economic and social conditions of the country
- Appropriate commodity trade structure: is a structure with harmonious combination of constituent parts, allowing maximum exploitation of comparative advantages, national resources, and partner’s strengths; and that contributes to promoting trade, especially
in the export sector, while also creating conditions to quickly and effectively improve the national trade structure
- Improving the commodity trade structure: is the structural shift
of components of the national trade in a positive direction, consistent with the development of social labor division, production resources,
as well as scientific and technological advances of the country, region and the world
2.2 Theoretical foundation
A number of important international trade theories that are the theoretical foundation for analyses of commodity trade structure are divided as follows: classical and neoclassical international trade
Trang 10theories including theory of comparative advantage, theory of factors
of production; and modern trade theories including theory of economies of scale, theory of production networks and global value chains, and national competitive advantage theory
2.3 Basis for evaluating the efficiency of bilateral commodity trade structure
The dissertation evaluates the efficiency of the Vietnam-Korea trade structure on the following basis and criteria: effectively exploiting comparative advantages, national resources and the level
of meeting the demand for input import for production and consumption; quality and competitiveness of export products; value added of export products and the level of national participation in regional and international production networks; and sustainability of import and export structure
2.4 Factors affecting bilateral commodity trade structure
2.4.1 Natural conditions of the country
2.4.2 Conditions and strategies of socio-economic development, and competitiveness of enterprises
2.4.3 National comparative advantage
2.4.4 Relations and policies on trade development of each country 2.4.5 Policies to attract FDI, and business strategy and outward investment of each country
Trang 113.1.1 Commodity trade structure according to import and export industry
The thesis uses the classification method of Hanson (2010) to classify import and export products into the following product groups: Agriculture, meat, dairy and seafood; Food, beverages, tobacco, wood, paper; Extracting industries; Chemicals, plastics, rubber; Textile, apparel, leather and footwear; Iron, steel and other metals; Machinery, electronics, transport equipment; Other industries
3.1.2 Commodity trade structure according to stages of production
The thesis uses classification method of Gaulier et al (2007) to analyze the trade structure between Vietnam and Korea by following commodity groups: primary goods; semi-finished products and parts and components; capital goods and consumption goods
3.1.3 Commodity trade structure according to technology content
The thesis uses the classification method of Lall (2000) to analyze Vietnam - Korea trade by following commodity groups: Primary products; Resource-based manufactures; Low-technology manufactures; Medium-technology manufactures; High-technology manufactures; and Non-classified products
3.1.4 Commodity trade structure according to the contribution of factors of production
The thesis uses the classification method of Hinloopen and van Marrewijk (2008) to analyze the Vietnam – Korea commodity trade
by the following production factors: raw products, natural-resource intensive products, labour-intensive products, technology-intensive products, human-capital intensive products, and non-classified products
3.1.5 Vietnam-Korea commodity trade according to value-added
The thesis uses the OECD’s database of trade in value-added (TiVA) to analyze the domestic value added in total export products
Trang 12between Vietnam and Korea; origin of value-added in exports of Vietnam and Korea
3.2 Researching bilateral commodity trade structure based on the use of trade pattern indices
3.2.1 Trade intensity index (TII)
The thesis uses the TII index to calculate the intensity of exports and imports between Vietnam and Korea, in relation to each other’s trade with the rest of the world
3.2.2 Trade complementary index (TCI)
The thesis employs the TCI index to assess the changes in the compatibility of import and export structure between Vietnam and Korea over time
3.2.3 Export diversification
The thesis uses export concentration index - HHI to analyze the level of export diversification between Vietnam and Korea in comparison with other countries in the region
3.2.4 Intra-industry trade index (IIT)
The thesis uses the IIT index of Grubel – Lloyd (1975) to analyze intra-industry trade between Vietnam and Korea; and employs price index to research vertical and horizontal intra-industry trade between the two countries
3.2.5 Export product sophistication index (EXPY)
The thesis uses the WITS of the World Bank to calculate the EXPY index, thereby assessing the sophistication of export products between Vietnam and Korea, in comparison with some other countries in the region
3.2.6 Revealed comparative advantage index (RCA) and normalized revealed comparative advantage (NRCA)
Trang 13The thesis uses RCA and NRCA indices to calculate export products that Vietnam and Korea have comparative advantages as well as comparative disadvantages
Chapter 4 CURRENT SITUATION OF VIETNAM - KOREA BILATERAL COMMODITY TRADE STRUCTURE IN THE
PERIOD 2001 - 2016
4.1 Overview of trade relations between Vietnam and Korea
4.1.1 Looking back on the history of Vietnam-Korea trade relations
The goods exchange between Vietnam and Korea began at a modest level when Vietnam decided to implement economic reforms
in the late 1980s However, it began to expand rapidly when the two countries established diplomatic relations in 1992 Vietnamese products exported to Korea in this period were mainly seafood, vegetables, coffee, clothes and furniture, while imported goods from Korea principally focused on fabrics and chemicals, petroleum products, trucks and spare parts
4.1.2 Export, import and balance of commodity trade between Vietnam and Korea after the year 2001
Bilateral trade between Vietnam and Korea expanded rapidly over time, from 2.1 billion USD in 2001 to 65.6 billion USD in 2018 Exports from Vietnam to Korea increased rapidly from 385 million USD in 2001 to 18.1 billion USD in 2018; while imports increasing from 1.7 billion USD in 2001 to 47.5 billion USD in 2018 Vietnam’s trade deficit with Korea expanded quickly, reaching 20.1 billion USD and 32.1 billion USD in 2016 and 2017 respectively, before reducing
to 29.2 billion USD in 2018
4.1.3 The importance of Vietnam-Korea trade to each country