PROB L EM S T A TEM EN T
Economic growth is a primary objective for any economy, and understanding its sources is essential for fostering acceleration in this growth This topic has sparked debate among economists, with notable figures like Solow (1957), Romer (1986), and Lucas contributing to the discussion.
In 1988, it was noted that Total Factor Productivity (TFP) contributes to long-term economic growth Additionally, Romer (1986) highlighted the importance of research and development, while Lucas (1988) underscored the critical role of human capital formation as a significant driver of growth.
Trade has historically been a crucial method for humans to exchange goods, allowing them to obtain essential products they could not produce themselves It served as a vital component of daily life, production activities, and social development In contemporary society, the significance of trade, particularly exports, has grown immensely, contributing to remarkable economic growth and prosperity in countries like Japan, China, Korea, and Taiwan.
The origins of economic theories can be traced back to renowned classical economists like Adam Smith in 1776 and David Ricardo in 1817, whose foundational ideas have influenced modern economic thought Additionally, the contributions of other prominent economists, such as Misselden in 1623, further connect and enrich this historical narrative.
4 stressed the positive role of international trade as a strong motivation of economic growth, he pointed out that the government should encourage exports and minimize imports Keynes
In 1936, the impact of aggregate demand factors on economic growth was examined through the concept of the multiplier effect Thirlwall (1979), a post-Keynesian economist, emphasized that demand, particularly from international trade, plays a crucial role in either stimulating or hindering growth These insights lay the groundwork for a systematic and scientific analysis of the relationship between exports and economic growth.
Numerous studies utilizing national, regional, and international data have been conducted to explore the relationship between exports and economic growth These investigations consistently indicate a positive correlation, supporting the notion that increased exports contribute to economic expansion (Sprout, 1993; Van den).
The successful outward-oriented development models of East Asian countries over recent decades highlight the crucial role of exports as a key driver of economic growth in the region.
While a positive relationship between exports and economic growth is often assumed, it does not hold true for all countries or regions Increasing exports may not necessarily lead to higher economic growth rates if other conditions are not met Several studies have indicated a weak correlation between exports and GDP growth in certain countries (Dodaro, 1993; Jung, 1985; Salvatore, 1991) Therefore, policymakers must carefully assess the specific dynamics of their own economies before implementing strategies that prioritize export growth as a key driver of economic development.
Recent studies indicate that modern economies, particularly in Southeast Asia, are experiencing faster growth compared to 50 years ago, largely due to the benefits of free trade However, the economic expansion of five Southeast Asian nations, driven by export support, remains unsustainable and fraught with risks, as evidenced by external shocks like the 1997 Asian financial crisis.
The economic growth of Southeast Asia, particularly Vietnam, has been significantly impacted by global economic crises, such as those in 1998 and 2008 Given the diverse levels of development among the five Southeast Asian countries, it is crucial to analyze how exports affect their economic growth differently Policymakers should focus on restructuring export compositions to prioritize high-value goods with stable long-term demand and implement preferential policies to support export sectors Additionally, enhancing the competitiveness of sectors with a comparative advantage is essential Vietnam, as a developing nation, is particularly vulnerable due to its reliance on exports, which were adversely affected by the 2008 global financial crisis, leading to a decline in demand for its products This study aims to evaluate the significance of exports in driving Vietnam's economic growth amidst these challenges.
RESEARCH OBJECTIVES
The key goals of the thesis are to:
(1) To determine the impact of exports on economic growths of the selected Southeast Asia countries.
(2) To examine the difference in the impact of exports on economic growth cross the selected Southeast Asia countries And,
(3) To propose appropriate policies for fostering the economic growth and development of Vietnam.
RESEARCH QUESTIONS
To reach the above objectives the paper has to answer the following questions raised from the above objectives:
(1) Do exports impact economic growths of the selected Southeast Asia countries?
(2) How different do exports impact on growth across the selected countries?
(3) What are the policy implications for policy-makers?
STRUCTURE OF RESEARCH
The remainder of this paper contains five parts:
The first part includes Chapter 2, which is a literature review in relation to exports and growth Also, this chapter includes definitions and a summary of research results of previous studies.
The second part consists of Chapter 3, which outlines the thesis design and procedures.
The chapter also contains a summary of data collection as well as analysis methods used.
The third part contains Chapters 4, which is an overview and a highlight of economic growth and exports of the five selected Southeast Asia countries over the period of
1991 - 2010 Economic and export achievements of countries are also illustrated through figures and data collected from various reliable sources.
Chapter 5 presents and discusses the empirical results, focusing on the relationship between exports and economic growth in the selected countries This section includes both descriptive statistics and regression results, providing a comprehensive analysis of the data Additionally, a summary and comparative analysis of specific results for each country are included, offering valuable recommendations based on the findings.
Chapter 6 serves as the concluding section of the article, synthesizing results and analyses from earlier chapters to offer recommendations and policy proposals Additionally, this chapter addresses the limitations of the study and suggests areas for further research.
This paper also has four appendices:
Appendix A records the regression result from using the fixed effects approach.
Appendix B lists the results of testing Heteroscedastiscity via White-test approach for each country.
Appendix C consists of the scatter diagrams of two variables: Exports and Growth for each country.
Appendix D is the collection of the scatter diagrams showing the correlation of the variables in the model for each country.
INTRODUCTION
This chapter reviews theoretical literature on the impact of exports on economic growth, drawing insights from both classical and modern economic schools of thought It defines key concepts related to exports and economic growth while summarizing findings from various economic journals, research papers, and studies by authors worldwide Ultimately, the chapter concludes with a summary of empirical studies that highlight the relationship between exports and economic growth, supporting the research objectives of this paper.
CONCEPTS AND DEFINITIONS
According to Blanchard (1997), exports are the purchases of domestic goods and services by foreigners The exports of one country are, by definition, the imports of another.
Net export: is the whole value of total exports in a country excluding the total imports value.
Net exports play a crucial role in determining a country's GDP within an open economy This concept is defined as the difference between the value of goods and services exported from a country and the value of those imported from abroad A trade surplus occurs when exports exceed imports, resulting in positive net exports, while a trade deficit arises when imports surpass exports, leading to negative net exports.
Following Krueger (2000), “Export growth is defined as the long term trend in a country’s foreign exchange earnings from goods and non-factor services”.
Exports play a crucial role in driving economic growth through two main channels: they generate profits and help stabilize a country's finances, improving its debt balance Additionally, an increase in exports can lead to greater productivity within the nation The formula for calculating net exports is: Net Exports = Exports - Imports.
Economic growth refers to the expansion of an economy, characterized by an increase in the production of goods and services within a country This concept is best measured by the annual percentage growth rate of Gross Domestic Product (GDP), which reflects the overall economic performance and output growth.
Economic growth, as defined by Graeme (2006), refers to the annual increase in a country's domestically produced goods and services, measured by changes in GDP compared to previous years It highlights the growth in economic output without considering the distribution of wealth among the population It's important to distinguish economic growth from economic development, a broader concept that encompasses improvements in living standards and overall well-being.
Growth can be defined as the change in total real output or per capita real output over time A common measure of growth is expressed by the formula g = (Yt – Yt-1)/Yt-1, where Yt represents the output at the current time and Yt-1 represents the output at the previous time.
Yt and Yt-1 are the total real output or per capita real output in periods t and t - 1, respectively.
Economic growth can be categorized into actual and natural growth rates The actual growth rate reflects the percentage change in output over a specific time period, while the natural growth rate, introduced by Harrod in 1939, represents the growth of an economy's productive potential, often referred to as the 'social optimum' rate Sachs (1993) further defined potential output as the output level achieved at the natural rate of unemployment.
THEORETICAL FRAMEWORK
Historically, the development of trade has been closely linked to economic growth, a relationship emphasized by classical economists such as Adam Smith and David Ricardo Smith (1776) highlighted the connection between international trade and productivity improvements through market expansion, which facilitates economies of scale Ricardo (1817) further demonstrated that countries specializing in their comparative advantages benefit mutually from trade Additionally, free trade allows domestic firms to access a wider range of foreign inputs at lower costs, reinforcing the positive impact of export expansion on economic growth and accelerating overall economic development.
Classical economic schools of thought also consists of Mathus (1798), Ramsey (1928), Young
In the context of economic growth, key contributors like Knight (1944) and Schumpeter (1934) highlighted the importance of physical and human capital accumulation, technological advancements, and competitive dynamics These concepts have influenced neoclassical growth theory, with prominent economists such as Cass (1965), Koopmans (1965), Solow (1956), Swan (1956), and Romer building upon classical ideas to further understand the mechanisms driving economic progress.
In their foundational models, Grossman and Helpman (1991) and Aghion and Howitt (1992) identified four key growth factors: labor, capital, technology, and output, though they differ on the significance of each factor's contribution The neoclassical growth model is predicated on three core assumptions: the labor force and labor-saving technological advancements increase at a steady exogenous rate, all savings are fully invested, and output is determined by labor, capital, and technology, with a production function reflecting constant or diminishing returns to scale Ultimately, these models suggest a convergence of per capita income globally.
New growth theorists or endogenous growth theorists as Romer (1986), Lucas (1988), Rebelo
In 1991, Barro highlighted the significance of research and development (R&D), knowledge spillovers, and the external benefits of human capital, addressing the limitations of neo-classical economists by examining these factors under conditions of imperfect competition These elements play a crucial role in mitigating diminishing returns on capital accumulation Furthermore, Barro's model posits that the long-run growth rate is determined internally, leading to the classification of these theories as endogenous growth models.
Developing countries, characterized by labor abundance, typically focus on labor-intensive goods with diminishing returns, while developed nations, being capital-abundant, specialize in capital-intensive manufactured goods that yield increasing returns This disparity can lead to challenges such as Engel's law for developing nations and economies of scale for developed ones, risking a deterioration in terms of trade that may destabilize the balance of payments in less developed countries, thereby hindering their economic growth Additionally, reliance on comparative advantage can narrow product ranges and create balance-of-payments instability, undermining development Over time, comparative advantages can shift due to government policies, and intra-industrial trade persists due to variations in consumer preferences and technology Furthermore, the theory primarily considers private costs, neglecting potential social costs from externalities in industrial projects prevalent in developing nations, which supports arguments for industry protection over free trade Finally, while the growth of primary commodity exports has minimal impact on other sectors, the expansion of manufactured goods significantly influences related activities through backward and forward linkages.
Comparative advantage is fundamental for advocates of free trade, as trade liberalization is essential for economic growth, despite its potential drawbacks for development The debate centers on the timing and approach to implementing free trade While classical and neoclassical economists emphasize the supply side of trade and growth, post-Keynesian economists focus on the demand side, challenging the notion that supply inherently creates demand Keynes argued that aggregate demand—comprising consumption, investment, government expenditure, and net exports—drives economic growth, with changes in these components affecting growth through multipliers Thirlwall highlighted the critical role of exports in aggregate demand, noting that exports not only originate externally but also stimulate other demand components and facilitate imports Additionally, exports enable access to essential intermediary goods that may be costly to produce domestically, underscoring the importance of the supply side in economic development.
Recent time, several seminal theoretical works such as Grossman (1991) has given out a framework to understand and analyze more deeply the effects of exports on economic growth.
Total factor productivity can significantly increase through the expansion of exports, which enhances economies of scale and generates positive externalities These benefits include improved management skills, the diffusion of technology, a more skilled workforce, and better capacity utilization (Bald, 1996).
Almost empirical studies admitted that free trade is the determinant of economic development.
Numerous cross-country studies have established a strong positive correlation between trade orientation and economic growth, particularly highlighting the significant improvements in welfare and growth that developing countries can achieve through integration into free international trade The economic performance of East Asia over the past several decades provides compelling evidence that exports are a crucial driver of growth in this region However, the literature on the impact of trade openness on economic growth still presents some reservations, particularly regarding the causal relationship between exports and economic growth, as noted by Clarke's (1992) analysis of trade policy reforms.
12 on economic performance by pooled data of 80 developing countries in the period of 1981-
In 1988, it became evident that the advantages of trade reform strategies on economic performance were ambiguous Rodriguez (1999) highlighted several shortcomings in recent empirical studies that examine the effects of trade liberalization.
Research indicates that there are threshold effects between exports and economic growth Michaely (1977) analyzed data from 41 developing countries between 1950 and 1973, finding a positive and statistically significant correlation between exports and economic growth, but only when countries reach a certain level of development Similarly, Sheehey (1992) highlighted that in a study of 53 non-oil developing countries, the growth of export share significantly impacts industrialized nations.
Export composition significantly influences economic resilience, with primary commodity exports being more sensitive to cyclical fluctuations compared to manufactured goods Countries that export manufactured products tend to experience less impact from economic recessions and recoveries, despite their relatively small share in global markets (Harrison, 1996) Empirical studies, including Greenaway's (1994) analysis of 69 countries, support this perspective, indicating that under-developed nations focusing on manufactured exports are more likely to benefit from export-led growth than those relying on food and other primary commodities.
Recent research by Giles (1996) has extensively reviewed the relationship between exports and economic growth, analyzing over 150 studies published from 1963 to 1999 These studies are categorized into three groups: the first group focuses on cross-country rank correlation coefficients, the second utilizes cross-sectional regression analysis, and the third employs time-series techniques on a country-by-country basis Notably, two-thirds of the studies fall into the third group, with over 50% applying the Granger causality concept.
The relationship between exports and economic growth is complex, as exports constitute a significant portion of GDP, leading to potential causality in both directions Comprehensive studies on various underdeveloped countries, including Paraguay and Malaysia, as well as newly industrialized countries in Asia like Hong Kong, Singapore, Korea, and Taiwan, have found insufficient evidence to definitively establish this causality (Begum, 1998; Richards, 2001) While an increase in exports can positively influence production growth, this effect may be limited and counteracted by rising imports, which can negatively impact domestic production, as demonstrated by Ruiz-Napole.
(2001) through the Mexican case in the time: 1978 to 1994.
The seminal works of Romer (1986) and Lucas (1988) sparked a new era of research in economic growth, focusing on both neoclassical growth models and endogenous growth theory This theory posits that economies can achieve steady-state growth through various endogenous channels, highlighting that productivity improvements are crucial for fostering growth in developed countries.
Table 2-1 is a summary of empirical studies on the impact of exports on economic growth from many other authors and datasets over countries all over the world.
Table 2-1: Summary of researches studying on impact of exports on growth.
Cross-sectional data of 36 developing countries, 1960-70
GDP growth, Export, Investment and Labor growth
Exports have statistical insignificant effects on growth.
Panel data of 29 provinces in China 1985-1995
Real GDP growth, Real Export, Ratio of Domestic Investment over GEP &
Provincial GDP growth is largely due to export expansion.
Cross-sectional data of 37 countries
GDP growth, Export, Investment and Labor growth
Exports do not have effects on
GREX has statistical significance in 38 countries of88.
GDP growth, Export, Fixed Capital and Labor growth
Export growth does not lead to Growth. Salvatore and
GDP growth, Export, Domestic Investment, and Labor growth
GREX is not statistically significant.
Annual log of data of Gana 1970-97
Exports, Government consumption, foreign aid, private investment
Exports have positive effect on GDP growth.
Real GDP growth, Real Export, Gross Fixed Capital and Labor growth
Exports have significant short-run casual effect of real output.
Real GDP growth, Real Export
Below is the form of the linear econometric model that many economists have employed to test the impact of exports on economic growth:
The equation GGDP = 0 + 1GCAP + 2GLAB + 3TRADE illustrates the relationship between real GDP (GGDP), real capital stock (GCAP), labor force growth rate (GLAB), and international trade (TRADE) This model posits that enhanced marginal productivities in export production, driven by scale effects and externalities, contribute to economic growth By leveraging labor and capital stock, an expansion in the export sector is expected to foster GDP growth.
According to a neoclassical model, Model (1) could be re-assembled to become the equation of “Source of Growth” as follows:
INTRODUCTION
This is a summary of the chapter content In this chapter, there are five main sections:
When selecting an empirical model for regression analysis, this paper emphasizes the importance of choosing the most suitable option Among the available equations, specifically Equations (1), (2), and (3), the preference is given to Equation (3) due to its unbiased nature and the accessibility of relevant data for the variables involved.
This section outlines the methodology employed in the study, detailing the various methods used for data collection, the sources of information, and the limitations encountered during the data gathering process.
Besides, description of variables and estimate of expected signs of independent variables are the third section that is also made and formed in tables.
Finally, the last section also specifies all steps used in regression and data estimate to prepare for the next chapter.
EMPIRICAL MODEL
Research findings from Feder (1982) and Balassa (1978) indicate a biased understanding of the relationship between exports and GDP However, Sheehey (1990) emphasizes a direct correlation between exports and GDP growth across major production categories Given the limitations of the earlier approaches, this study adopts Sheehey's methodology for a more accurate analysis.
Based on the Equation (3) mentioned in the literature review, the Equation (3) is re-written as follows:
METHODOLOGY AND DATA COLLECTION
Quantitative analysis relies heavily on accurate data for estimating regression coefficients and understanding real-world scenarios Despite the challenges in data collection for a thesis, efforts were made to gather information from official sources The primary data for this study, which spans from 1991 to 2010, was sourced from the World Bank website and includes annual observations on real GDP, real exports, gross capital formation, and labor force statistics for Vietnam, Thailand, Malaysia, Indonesia, and Singapore, supplemented by additional data from various official sources such as UNDP and ADB.
This article focuses on five Southeast Asian countries—Indonesia, Malaysia, Singapore, Thailand, and Vietnam—due to their diverse economies and geographical proximity These nations exemplify the region's economic spectrum, with Vietnam and Indonesia representing developing economies, Thailand as a transitional economy, and Malaysia and Singapore as developed nations All five countries have implemented significant reforms in their export and economic policies, aiming for export-oriented growth and development While the survey sample does not encompass all of Southeast Asia, it adequately reflects the region's export dynamics and developmental trends.
The thesis will employ both descriptive statistics and regression methods for data analysis to find out the impact of export growth on economic growth of economies in ASEAN-5.
This paper conducts a comprehensive analysis of the relationship between export growth and economic growth by utilizing comparative charts and export composition tables for selected countries It examines the correlation between exports and GDP growth over time, employing descriptive statistics such as Mean, Median, Maximum, Minimum, Standard Deviation, and Skewness Additionally, the study analyzes the correlation among the model's variables, including GDP growth, export growth, capital growth, and labor growth The findings will be presented in tabular form, providing a clear overview of the relationships among these key economic indicators.
This paper utilizes a panel data set to explore the relationship between exports and economic growth through a regression model, employing fixed effects and the Seemingly Unrelated Regression (SUR) method The fixed effects approach enables tailored regression outcomes for each country, facilitating a detailed analysis of the impact of exports on economic growth individually Additionally, the paper will assess heteroscedasticity (HET) for each country's data to ensure the reliability of the estimated results, ultimately concluding with policy implications based on the findings.
D E SC R I P T I ON O F V A R I A B L ES
The following table outlines the dependent and independent variables within the model, as derived from equation (4), and includes the anticipated signs of the independent variables.
Table 3-1: Summary of variables in the model
No Variables Description Expected sign
Annual GDP growth rate (annual %) This is the dependent variable
Fixed -Effects Method of Panel Data
Negative effect Open Trade Export growth
The ratio of investment to GDP
(Gross Fixed Capital Formation used as a proxy of I/Y)
SUMMARY OF THE STEPS USED IN THIS STUDY
The analysis framework illustrates the relationships among variables, the models employed, and the theoretical and empirical foundations of the study Figure 3-2 outlines the workflow for data processing, highlighting the key steps utilized in the research A summary table accompanies this figure, providing a concise overview of the data analysis procedures implemented in the paper.
Figure 3-1: Analysis framework for the impact of exports on growth.
Macro-economic Theories involved in GrowthEmpirical studies
Figure 3-2: Summary of steps used in data analysis
Data on real GDP, real GDP growth, real exports, and gross capital formation for five Southeast Asian countries—Indonesia, Malaysia, Singapore, Thailand, and Vietnam—was sourced from the World Bank website This data was subsequently analyzed and transformed into four key variables for the model: GDP Growth Rate, Growth Rate of Capital to GDP, Labor Growth, and Growth Rate of Exports.
The transformed panel data set will be analyzed using Eviews v 6.0 econometric software, starting with descriptive statistics to assess the relationships between variables Following this, an Ordinary Least Squares (OLS) regression with a Fixed Effects Model will be utilized for empirical estimation.
INTRODUCTION
This chapter provides a comprehensive overview of the export policies and economic growth strategies in Southeast Asian countries, highlighting the economic achievements of five key economies over the past two decades Additionally, it includes statistical tables to clearly illustrate significant developments in the economies of these five Southeast Asian nations.
SELECTION REASON OF FIVE ASIAN COUNTRIES
The selection of ASEAN 4 countries and Vietnam for studying the impact of exports on economic growth is justified by their shared location in Southeast Asia and membership in both ASEAN and APEC These nations exhibit a strong export-oriented economy, which has facilitated rapid and stable economic growth, positioning them as emerging developed countries.
HIGHLIGHTS OF EXPORT ACTIVITIES AND SOURCES OF EXPORT GROWTH OF ASEAN-5 OVER THE LAST DECADES
SOURCES OF EXPORT GROWTH OF ASEAN-5 OVER THE LAST DECADES
Southeast Asia has experienced significant economic growth since 1990, with most ASEAN countries achieving impressive growth rates between 4% and 9% over the past two decades This rapid development began with Singapore and Malaysia, which implemented effective export-oriented policies, leading to remarkable economic success and establishing themselves as "Economic Dragons" and "Economic Tigers" in Asia and globally.
Inspired by the successful economic models of Singapore and Malaysia, other ASEAN nations, particularly Thailand, Indonesia, and Vietnam, are adopting export-oriented policies to transition from developing to developed economies These countries have recognized the achievements of Singapore and Malaysia and are implementing similar strategies to enhance their economic growth and development.
4.3.1 Economic growth of Vietnam over the studied period
Vietnam, a densely populated developing nation, has made significant strides in recovering from decades of war and economic challenges Over the past 30 years, the country has transitioned from a centrally-planned economy to a market-oriented one through the implementation of the "Doi Moi" (Economic Renovation) policy since 1986 This shift has fostered a liberal investment climate, attracting increasing interest from global investors as Vietnam integrates into the global economic and political landscape.
Vietnam remains primarily an agricultural production-based country, with key export products including rice, coffee, rubber, aquatic products, and natural resources like crude oil and minerals The light industrial sector, particularly textiles and footwear, continues to rely heavily on labor Following the "Doi Moi" reforms, especially Resolution No 10 on Agricultural Economic Management Reform, Vietnam transformed from a food-deficient nation into one of the world's leading rice exporters, significantly enhancing national food security.
Figure 4-1: GDP growth of Vietnam in the period of 1991 - 2010
Vietnam experienced robust annual GDP growth of 8-9.5% from the early 1990s until 1997 However, the Asian economic crisis led to a decline, with growth dropping to 5.8% in 1998 and further to 4.7% in 1999 Following this downturn, the economy began to recover, achieving growth rates of 6.7% in 2000, 7% in 2002, 7.7% in 2004, 8% in 2006, and reaching 8.5% in 2007.
From 2000 to 2010, Vietnam experienced an impressive average GDP growth rate of 7.1% annually, peaking at 8.4% in 2010, which marked the second highest growth in Asia The Vietnamese government, as stated by the Minister of Planning and Investment, set an ambitious GDP growth target of approximately 8.5% for 2007.
On November 7, 2006, Vietnam became the World Trade Organization's 150th member, after
After 11 years of preparation, including 8 years of negotiation, Vietnam's accession to the WTO aimed to significantly enhance its economy by promoting liberalization and expanding trade opportunities However, this membership also presents substantial challenges, compelling Vietnamese economic sectors to face intensified foreign competition.
Vietnam's economy is among the fastest growing globally, with an impressive annual growth rate exceeding 7% However, this growth is occurring from a relatively low economic base.
24 base, reflecting the crippling effect of the Vietnam War (1954–75) and austerity measures introduced in its aftermath.
Vietnam, an agricultural production-based country, has historically led in agricultural exports, averaging 37% of total exports from 1990 to 1996, primarily in rice, aquatic products, coffee, rubber, and pepper However, recent years have seen increasing challenges for agricultural exports due to fierce competition from countries like Thailand and China, as well as import barriers from major markets such as the United States and EU nations In addition to agricultural products, crude oil and light industrial goods, particularly textiles, footwear, and wood products, have emerged as significant contributors to the economy, helping to reduce unemployment While the value of light industrial exports lagged behind rice exports during 1990-1996, they have experienced rapid growth, marking a crucial shift in Vietnam's production structure amid ongoing industrialization.
Vietnam's export structure, while showing positive changes, remains heavily reliant on low value-added products and labor-intensive industries that depend on imported materials The country's revenue largely stems from crude oil and agricultural exports, making it susceptible to the fluctuations of international commodity prices.
In general, Vietnam exports are remarked by encouraging achievements over the last decades. Export turnover went up significantly from US$ 2.4 billion in 1990 to above US$5.4 billion in
1995 and reached approximately US$14.5 billion in 2000 From 2005 to 2008, the value of exports was recorded at an impressive growth of US$49.5 billion in 2008 as compared to US$32.5 billion in 2005.
Over the years, the export value has significantly increased, leading to a notable rise in the ratio of exports to GDP, which improved from 30.8% in 1990 to 68% in 2008, ranking the country fourth in the Asian region and eighth globally (GSO, 2009) Additionally, export turnover per capita saw substantial growth, climbing from US$36.4 in 1990 to US$557 in 2008 (GSO, 2009).
There are many reasons to explain the boom of Vietnam exports including the expansion of export market, the effective economic reform and the increasing competitive capacity of Vietnam.
In 2010, Vietnam's merchandise exports reached a value of $71.6 billion, marking a significant 25.5% increase from the previous year The country's key exports included crude oil, footwear, fisheries products, electronics, and rice, each contributing 5% to 8% of total exports Major export destinations for Vietnam were the United States (18.4%), Japan (13.69%), Turkmenistan (9.19%), Australia (7.98%), Singapore (5.61%), Germany (3.37%), and the United Kingdom (3.15%).
In 2007 Vietnam ran a trade deficit of US$14.1 billion, but the trade deficit for the first half of
2008 alone was measured at US$14.8 billion
Major Exports (2010): Crude oil, marine products, rice, coffee, rubber, tea, garments, shoes
4.3.3 Comparison of correlation between Vietnam’s export growth and economic growth
Table 4-1: Vietnam exports by sector, 2010
Figure 4-2: Export growth of Vietnam in the period of 1991 - 2010
Vietnam's export composition is largely dominated by agricultural products and crude oil, which together account for nearly 40% of the country's total export value This indicates that Vietnam's major exports primarily consist of low-value, labor-intensive goods, highlighting the limited contribution of these exports to the overall economy.
Despite Vietnam experiencing export growth exceeding 10% in recent years, this has not significantly influenced the country's overall economic growth The lack of consistency between the export growth curve and the GDP growth curve throughout the studied period suggests that Vietnam's economy is not yet driven by exports, contrary to the expectations of policymakers.
4.3.4 Economic growth of Malaysia over the studied period:
Malaysia is considered as one of the most successful non-western countries that has reached a relatively good transition in modern economic growth over the last decades Malaysia has
In the footsteps of the four Asian tiger economies—Taiwan, South Korea, Singapore, and Hong Kong—27 countries have committed to transitioning from agriculture and mining to manufacturing-based economies With substantial support from Japan and Western nations, Malaysia's heavy industries have flourished over the decades This shift has positioned exports as a key driver of Malaysia's economic growth, which saw consistent development policies resulting in a GDP growth exceeding 9% and low inflation rates during the 1990s.
From the end of the 19th century, it has been a main supplier of primary products for other industrialized economies such as: Tin, palm oil, timber, rubber, natural gas