26 April 2008 (Sat), GRIPS Campus in Tokyo, 14:00-17:30

"Decomposing Channel Impacts of Trade Liberalization
on Economic Growth in Vietnam "

Ms. Dinh Hoang Yen
PhD candidate, Graduate School of International Development (GSID), Nagoya University



In our April workshop, we welcomed Ms. Dinh Hoang Yen, a PhD candidate of the Graduate School of International Development (GSID), Nagoya University, and an on-leave expert of the Ministry of Industry and Trade (MoIT), Vietnam. She would like to share her recent research findings on the relation between trade liberalization and economic growth in Vietnam during 1986-2006.


According to Ms. Yen, her research resulted from both academic and practical motivations. On the one hand, it had been indicated in a number of studies that trade liberalization might or might not have significant impacts on economic growth due to different factors and country characteristics. On the other hand, there have been few studies analyzing such an important relation in Vietnam, so as to propose policies for further development of the country. In her research, Ms. Yen wanted to analyze the impacts of trade liberalization on economic growth in Vietnam via different channels.


Going further, Ms. Yen provided a brief overview about three main channels: (i) government policy, (ii) allocation and distribution, and (iii) technological transmission. These channels were then decomposed into six sub-channels, which were expected to have influences on economic growth under trade liberalization policies. These sub-channels were also considered as inputs of her channel analysis framework, which was modified from the work of Wacziarg (2001). In the model, the author chose such crucial variables as income, tariff, and non-tariff barriers to construct index for the variable representing trade liberalization, namely Tlib, which was then integrated into classical production function to see how national income would be changed under trade liberalization.  


[For detailed analysis, please refer to her presentation at the end of this summary].


As usual, Prof. Kenichi Ohno (GRIPS & VDF) started the discussion session. He said that the relation between trade liberalization and economic growth was controversial, so it would be better to make a review of all possible relations by adding some more literatures. Prof. Ohno also added that the model used in the research had been usually used in cross-country analysis, not for a single country with time-series data, and thus relations between macroeconomic variables should be carefully examined. Agreeing with this point, Mr. Vu Tuan Khai (YNU & VDF-Tokyo) said that some particular characteristics of time-series variables needed to be examined before conducting OLS and 3SLS, especially when all of them were macroeconomic variables which might have strong correlations. In her response, Ms. Yen said that she would carefully check all possible correlated variables in the model. She also admitted that some proxies used in the model might not reflect the original variables, which were difficult to get due to lack of data or data inconsistency.


Regarding the choices of variables in IV regressions, Prof. Ohno wondered that whether the chosen variables were obviously exogenous, and he commented that there would be some economic reasoning behind such choices. Going in detail, Prof. Ohno said that there might be some problems with the estimated results when the main variable Tlib was not included in the national income equation, because there would be correlations between this variable with other ones, which in turn might produce lower or higher coefficients than those presented. Ms. Yen answered that IVs were selected as appropriately as possible with the available data for Vietnam, and that the main objective of such regressions was to provide coefficients representing significant or insignificant relations between national income or trade liberalization with the chosen independent variables.           


In addition to the above comments, other participants also raised some more detailed questions about choosing variables and possible multiple links between them, and suggested that the author carefully check data as they were collected from different sources.


At the end of the presentation, Ms. Yen thanked all participants for their comments, which would be certainly included in the revised version of the research.


This time, we had about one and a half hours for informal meeting. New participants introduced themselves with information on current work and research interests. A variety of current economic and social issues in Vietnam, including inflation, FDI and ODA, and regional research network, were lively discussed.


As the paper is under review of journal, please contact Ms. Yen to get full paper. 


 (By Giang Thanh Long)


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