The 40th WORKSHOP
Graduate School of International Cooperation Studies (GSICS) Kobe University
In the first workshop of the year 2008, we invited Mr. Nguyen Hiep, a PhD candidate from the Graduate School of International Cooperation Studies (GSICS), Kobe University, to present his co-authored paper with Prof. Hiroshi Ohta.
To begin the presentation, Mr. Hiep made an overview of numerous international trade theories, in which different assumptions of firmsf characteristics were used to explain firmsf export and import activities. Given these assumptions, each theory could explain some aspects of trade patterns and their impacts on social welfare. There were two main hypotheses that many researchers have tried to explore: (ii) self-selection, meaning that better firms would self-select into export markets, and (ii) learning-by-exporting, meaning that exporting firms would perform better than would non-exporting firms. In this research, Mr. Hiep and his co-author used the former hypothesis to provide empirical evidences on exporting behaviors of the manufacturing firms in Vietnam.
Before explaining in detail his empirical models, Mr. Hiep reviewed previous studies on international trade with firm heterogeneity and entry costs, as well as case studies for a number of countries with self-selection hypothesis. Then, Mr. Hiep presented the models to evaluate firmsf exporting decisions. In these models, all firms would try to get the profit-maximizing level of exports under such constraints as export prices, variable costs, and entry costs. The export decision was expressed by a binary choice with 1 for decision to export, and 0 for decision to not export. In the empirical models, the authors used a set of independent variables as possible determinants of exporting decision, including revenue, number of labors, capital, wage, age of firm, capital intensity, and some dummy variables representing foreign status, industry, location, and time. In addition, Mr. Hiep also provided information about the data used in the research. The data included 1,150 firms in 17 manufacturing industries, and the authors could create panel data for these firms during 2002-2004. An exporting firm was one whose total value of direct exports was greater or equal 10 percent of its total assets.
To mitigate some possible econometric problems, the authors also conducted such various tests as unobservable effects and simultaneity. Mr. Hiep pointed out some data problems that limited the research. From the models, he provided three key findings about exporters in the manufacturing sector in Vietnam based on their characteristics: (i) exporting firms were those who had larger size, more business experience, and higher productivity than non-exporting firms; (ii) export production was more labor-intensive and low per-worker value-added; and (iii) there were no differences in labor skills between exporting and non-exporting firms. Regarding the entry costs, the estimates indicated that export experience, foreign status, types of industry, and time were important factors for firm in deciding exports, while productivity did not have any impact on their exporting decisions.
[For further information of empirical models, data, and findings, please refer to his paper and presentation at the end of this summary].
As usual, a lively discussion session was ignited by Prof. Kenichi Ohno (GRIPS & VDF). Regarding firmfs characteristics, Prof. Ohno thought that there would be a variety of factors that the research did not consider. For instance, it might be that changes in firmfs ownership (e.g. from domestic firms became foreign-invested firms) would substantially influence exporting decisions; or export brokers would play important role in firmfs exporting decisions, as they could help to reduce trade risks. In response, Mr. Hiep said that he did think about the ownership status, but it was difficult for him to conduct such estimates because number of years for data was really limited. For the latter, Mr. Hiep thanked for such a great comment, and he would want to look for the way to introduce export brokers in his models.
Regarding export experience, Mr. Vu Tuan Khai (YNU & VDF-Tokyo) suggested that the authors consider some more lags for variables in the presented models. Mr. Hiep answered that such empirical work would make the results different, but he could not be able to do since there was only 3-year dataset.
All the participants shared a common question about the role of exchange rates in firmfs exporting decisions. Mr. Mizanur Rahman (GRIPS) said that export prices and exchange rates were obviously related, and thus the model would provide really different estimated results once exchange rates were also introduced. In addition, Prof. Ohno said that exporting decisions were largely depended on uncertainty of exchange rate changes. He pointed out that, in Vietnam changes in exchange rate were not as much as those in export prices, especially coffee and rice. In his feedbacks, Mr. Hiep said that in the model export prices were adjusted with exchange rates, and therefore such prices could reflect changes in exchange rates. Though, he said that he would examine how the estimated results would be changed with an introduction of exchange rates in the model.
Providing some results about productivity and efficiency of the manufacturing firms in Vietnam, Mr. Giang Thanh Long (GRIPS & VDF-Tokyo) suggested that the authors categorize firms by the sub-industries in the manufacturing sector. According to him, in terms of productivity measures, it might be biased to pool firms using more labor-intensive technology (such as garments and textiles) with firms using more capital-intensive technology (such as machinery, equipment, and electrical products, and electronics).
At the end of the presentation, Mr. Hiep, on behalf of Prof. Ohta and himself, thanked all the participants for useful comments and suggestions on the research.
We then close the presentation session, and had about 1-hour informal meeting. A new member of VDF-Tokyo, Ms. Le Thi Thuy Duong from Waseda University, was introduced to the participants. We also announced to the participants that we would not have monthly workshop in February due to very tight working schedule of Prof. Ohno.
(By Giang Thanh Long)
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