TABLE OF CONTENTSLIST OF ACRONYMS.................................................................................................... iLIST OF TABLES .......................................................................................................... iiLIST OF FIGURES........................................................................................................ iiiINTRODUCTION........................................................................................................... 11. Abstract ................................................................................................................. 12. Research background and rational ........................................................................ 13. Research objectives ............................................................................................... 3Research aims............................................................................................................... 3Research objectives...................................................................................................... 3Research Questions ...................................................................................................... 4The scope of the research............................................................................................. 4Research method .......................................................................................................... 4Research structure ........................................................................................................ 4CHAPTER 1. Literature review ...................................................................................... 61.1. Overview of agricultural products and agricutural products export ..................... 61.1.1. Overview of agricultural products .................................................................. 61.1.1.1. Definition.................................................................................................. 61.1.1.2. Characteristics of agricultural products.................................................... 81.1.2. Overview of agricultural products export....................................................... 91.1.2.1. Some theories of international trade......................................................... 9a. The theory of comparative advantage............................................................ 9b. HeckcherOhlin Theory ............................................................................... 111.1.2.2. Definition and the importance of agricultural products export.............. 12a. Definition of agricultural products export ................................................... 12b. Role of agricultural products export in Vietnam’s economy....................... 131.2. Overview of exchange rate. ................................................................................ 151.2.1. Definition of Exchange rate.......................................................................... 151.2.2. Types of exchange rate. ................................................................................ 151.2.2.1. Based on the object to determine the exchange rate .............................. 15a. Official exchange rate .................................................................................. 15b. Market exchange rate................................................................................... 161.2.2.2. Based on payment term .......................................................................... 16a. Spot exchange rate ....................................................................................... 16b. Forwards exchange rate ............................................................................... 161.2.2.3. Based on the value of the exchange rate ................................................ 16a. Nominal exchange rate (NER) ..................................................................... 16b. Real Exchange rate (RER) ........................................................................... 161.3. Literature review of domestic and abroad researches......................................... 171.3.1. Literature review of abroad researches......................................................... 171.3.2. Literature review of domestic researches. .................................................... 18CHAPTER 2. RESEARCH METHODOLOGY........................................................... 202.1. Research objectives Research questions........................................................... 202.2. Research hypothesis............................................................................................ 202.3. Research methodology........................................................................................ 222.3.1. Research methodology.................................................................................. 222.3.2. Data collection .............................................................................................. 222.3.3. Data processing method................................................................................ 252.3.3.1. Unit root test........................................................................................... 252.3.3.2. Cointergration test................................................................................. 252.3.3.3. Causality test .......................................................................................... 262.3.3.4. VAR model and VEC model.................................................................. 272.3.3.5. Evaluation of reliability and accuracy data sources............................... 28CHAPTER 3. Research results...................................................................................... 323.1. Situation of Vietnam’s agricultural products export........................................... 323.1.1. Situation of Vietnam’s agricultural products export in the period 20152019................................................................................................................................. 323.1.2. Situation of Vietnam’s agricultural main products export to the EU market inthe period 20152019.............................................................................................. 333.2. Situation of EURVND exchange rate in the period of 20152019.................... 403.3. The influence of EURVND exchange rate (Ex) on Vietnamese agricultural mainproducts exports (EVN) to the EU market................................................................. 403.3.1. Unit root test ................................................................................................. 403.3.2. Cointergration test ....................................................................................... 433.3.3. Determine the lag length upon VAR model ................................................. 443.3.4. Vector Error Correction Model (VEC model).............................................. 453.3.5. Vector Autoregressive model (VAR model) ................................................ 473.3.6. Granger causality test ................................................................................... 50CHAPTER 4. Conclusion and some recommendations................................................ 524.1. Conclusions ......................................................................................................... 524.2. Some recommendations to improve Vietnamese agricultural products export tothe EU market and enhance competitiveness of Vietnamese agricultural industry... 534.2.1. For the government........
Abstract
The goal of this article is aiming to assess the impact of the EUR/VND exchange rate on the value of Vietnamese agricultural major goods exported to the EU market (EVN) using the Johansen’s cointegration test, the Causality test Granger model, and the VAR/VEC model The results indicate that there is one cointegrating equation between the two selected variables It means that the exchange rate has an influence on EVN in the long-term While, in the short run, Granger causality relationship is confirmed to be existed between the EUR/VND exchange rate and the EVN, but not in the opposite direction Overall, the impact of EUR/VND exchange rate on the value of Vietnamese agricultural major products exported to the EU market (EVN) has been thoroughly examined in this study using novel methodologies The findings in this study will be highly useful for Vietnamese farmers, exporters, and stakeholders in investment and risk management, as well as the Vietnam government in policymaking
Keyword: Cointegration test, VAR/VEC model, Granger Causality test, EUR/VND exchange rate Vietnamese agricultural main products.
Research background and rational
Agricultural, one of the most significant links in the Vietnamese economy, is a simple labor-intensive stage that often takes use of cheap labor prices and land in countries with sufficient labor resources As a result, agricultural development is generally rapid and efficient in developing countries in the early phases of industrialisation, such as Vietnam
In contrast, industrialized countries with high levels of technology have high labor costs, resulting in a poor level of agricultural competitiveness As a result, these countries tend to gravitate toward industries with more technical content, lower labor requirements, and higher profitability In other words, Agricultural can promote its position in emerging
2 countries with favorable conditions, like as Vietnam, due to comparative advantages in human resources, land, and labor prices
Vietnam is still predominantly an agricultural country, and agricultural exports play a critical role in fostering social stability and improving farmers' quality of life, contributing to the country's economic progress With the present agricultural goods and the same potential in terms of natural and social factors, Vietnam intends to be among the top 5 agricultural product exporters in the world
During the period of 5 years from 2015 to 2019, Vietnam agricultural products export to
EU market was almost paralle with the direction of EUR/VND exchange rate and steadily increase from 1.3 billion Euro in 2015 to more then 1.5 billion Euro in 2019, while the exchange rate increase from nearly 24000 VND/EUR in 2015 to 25990 VND/EUR in 2019 According to State Bank of Vietnam Decision No 2730/Q-NHNN dated December 31, 2015, there is only acception for 3% or less in the fluctuation of the exchange rate daily Thus, the government controls the EUR/VND exchange rate; nonetheless, with a total export value of more than EUR 1.5 billion per year, even a little shift in currency rate might pose a significant risk to exporting firms and farmers
Based on this context, a deep understanding of the influence of the EUR/VND exchange rate on agricultural commodities export value in general, and agricultural main commodities export value to the EU market in particular, is critical for firms, farmers, and the Vietnamese government, since it aids in better characterizing the transmission mechanism of the influence of exchange rates on Vietnamese agricultural main products export value to the EU market
Xie et al (2008), Rahman and Serletis (2009), Doganlar (2002) and others have conducted extensive research on the relationship between the exchange rate and foreign trade or export as well as Cheung and Sengupta (2013), Buguk et al (2003) There are just a few studies by Vietnamese scholars on the impact of exchange rates on main products export value in general, and Vietnamese main products export value to EU
3 market in particular The Multiple Linear Regression (MLR) model are the key methodologies used in these publications According to Granger and Newbold (1974), Hamilton (1994), Ferson et al (2003), and Mccallum (2010), the most significant shortcoming of MLR models for estimating time series data is false regression if ,at the level, the variables are not stationary
In this regard, the study “ASSESSING THE INFLUENCE OF EXCHANGE RATE ON
VIETNAMESE AGRICULTURAL” will re-examine this issue By using Cointegration test, VAR/VEC model, and Granger causality test, this research aims to analyze the impact of EUR/VND exchange rate on Vietnamese agricultural main product export value to EU market in the period of 2015-2019 Finally, with the results of all of the above model, several recommendations and solutions will be proposed to promote exports of the Vietnamese agricultural main product export value to EU market.
Research objectives
This research aims to (1) analyze the impact of the EUR/VND exchange rate on the export value of Vietnamese agricultural main product export value to EU market during the period from 2015 to 2019; (2) give several recommendations to better exploit the agricultural main product export value to EU market in the next period
The research consists of four specific objectives Firstly, this study clarifies the current situation of EUR/VND exchange rate and Vietnamese agricultural main product (Rice, Pepper, Tea, Coffee, Vegetables, Rubber) export value to EU market in the period of 2015-2019 Secondly, conducting Cointergration test, Causality test, VAR and VEC model to signify the influence of these two selected variables Finally, from the above analysis, some recommendations which exploit and promote the export value of Vietnamese agricultural main product export to EU market in the next period are proposed
RQ1: What is the situation of Vietnamese agricultural main product export to EU market and EUR/VND exchange rate in the period of 2015-2019?
RQ2: How does the EUR/VND exchange rate influence the Vietnamese agricultural main product export to EU market in the period of 2015-2019?
RQ3: What could be the policies and solutions to boost Vietnamese agricultural main product export to EU market in the next period?
The scope of the research
According to research subjects, the study focuses on analyzing the Vietnamese agricultural main product value which includes rice, coffee, pepper, tea, rubber, vegetables in the five-year period from 2015 to 2019 As for the scope of this research, the paper aims to estimate export value of Vietnamese agricultural main product export to EU in the given period
Quantitative research method is considered to be most suitable with the research objectives, based on secondary data Through the application of quantitative methods, namely Cointegration test, VAR/VEC model, and Granger causality test, the impact of EUR/VND exchange rate on Vietnamese agricultural main product export to EU market will be indicated and reflected in the form of metrics and statistics
This research has four chapters in addition to the Introduction, Conclusion, Appendix, and References:
Chapter 1: Literature review Based on our analysis of prior relevant works, we propose a definition of agricultural products and agricultural product export, as well as a cointergration model, causality test, VAR and VEC model The proposed research model
5 is then highlighted through the evaluation and discovery of fresh points, as well as the inheritance from previous inquiries
Chapter 2: To address the research questions, research hypotheses are established in this chapter Furthermore, a quantitative study approach is used to evaluate the effect of the EUR/VND exchange rate on the export value of agricultural major products to the
EU market Data for research is gathered from reliable sources, verified by international organizations, and then run via Johansen's Cointegration test, VAR/VEC model, and Granger causality test
Chapter 3: Research results The findings are shown in a panel table to show the impact of the EUR/VND exchange rate on the export value of agricultural major goods to the
Chapter 4: Conclusions and recommendations Prior to the topic-based development suggestion, the limits of this article are clarified To increase export value and industry competitiveness, a framework of solutions based on Vietnam's export situation is suggested
Literature review
Overview of agricultural products and agricutural products export
Agricultural products in the simple sense are groups of products produced based on horticulture such as crops, poultry, livestock, etc In order to define more accurately, serving the research object, the author in turn approaches the concepts of agricultural products given by different organizations and countries
According to World Trade Organisation (WTO)
According to the WTO's agricultural agreement, agricultural products are all products listed from chapters I to XXIV and some specific products of other schools in the HS code system (except fish and fish products)
Basic agricultural products such as rice, wheat, flour, milk, live animals, coffee, pepper, cashews, tea, fresh vegetables,
Derivative products such as bread, butter, cooking oil, meat,
Products processed from agricultural products such as confectionery, dairy products, sausages, soft drinks, wine, beer, tobacco, cotton fibers, raw animal skins,
From the perspective of the European Union (EU)
Although the EU does not specify which "agricultural products" are in any jurisdiction, the European Commission's Trade Directorate (DG Trade) makes a list of what is
7 considered as an agricultural product based on the Standard International Trade Classification Revision 3 (SITC rev.3) as follows: o 0 - Food and live animals o 1 - Beverages and cigarettes o 21 - Hides, skins and furskins, raw o 22 - Oil seeds and oleaginous fruits o 231 - Natural rubber & similar gums, in primary forms o 24 - Cork and wood o 261 – Silk o 263 – Cotton o 264 - Jute, other textile bast fibre, n.e.s., not spun; tow o 265 - Vegetable textile fibres, not spun; waste of them o 29 - Crude animal and vegetable materials, n.e.s o 4 - Animal and vegetable oils, fats and waxes
According to General Department of Vietnam Customs
Currently, there is no legal source of Vietnam to clearly define the concept of
"agricultural products" However, according to the criteria of the General Department of Vietnam Customs used in the Statistical Report 2020, items such as vegetables and fruits, cashew nuts, coffee, tea, pepper, rice, rubber, cassava and products made from cassava are counted as agricultural products
Summarizing the above points of view, agricultural products can be understood as
"products of agricultural production activities, including finished or semi-finished products, obtained from plants and animals or the growth of plants and animals (excluding products of the forestry and fishery industries)" (Ngo Thi My, 2016)
Perishable products, need to be preserved
Most agricultural products are perishable, but the duration of spoilage varies between crops Some agricultural products spoil in less time and others can still be used for a while Milk, meat, fruits, vegetables, stay fresh but only for a short time, so they are easily spoiled These products must be brought to market as quickly as possible Special refrigeration is required to keep these products safe and fresh Food crops, grains such as rice, wheat, mustard, can still be used for a long time
Most agricultural products are only be produced in certain seasons food crops such as maize, rice, wheat; Food crops such as sugarcane, tobacco, jute and vegetables, potatoes and fruits are produced in certain seasons But some products such as fish, eggs, can be produced in all seasons Therefore, seasonal products can affect the agricultural market
With the exception of some products that can only be produced in a particular region, most agricultural products are produced in all regions of the country As farmers are scattered in different parts of the country, middlemen collect agricultural products and supply them to the market
Most agricultural products are heavy and bulky Therefore, the cost of transportation and storage is higher than the value of these products
Diversity in quantity and quality
The quality and quantity of agricultural products vary with soil productivity, season and climate Seed quality, fertilizer use, also make a difference in quality
1.1.2 Overview of agricultural products export
1.1.2.1 Some theories of international trade a The theory of comparative advantage
David Ricardo (1772 - 1823) was an outstanding representative of classical bourgeois political economy He left behind a theory that has profound influence in his time as well as has practical value today, which is comparative advantage
This theory was developed based on the absolute view of Adam Smith Accordingly, Ricardo emphasized that countries that have an absolute advantage over all other countries or do not have an absolute advantage over other countries in the production of all products can still benefit from foreign trade Countries can still participate in the division of labor and international trade because each country has a comparative advantage in the production of certain products By specializing in the production and export of products in which a country has a comparative advantage, world production and consumption will increase, resulting in each country benefiting from trading Thus, comparative advantage is the basis for countries to trade with each other and is the basis for the international division of labor
David Ricardo builds a model of comparative advantage based on several hypotheses:
Analysis of the pattern of trade with two countries and two product categories;
Factors of production are not outwardly displaced;
The technology of the two countries is the same;
Solve the cause of international trade
Explain the formation of trade relations between two countries without any absolute advantage
Hypothesize that specialization is absolute
Unforeseeable case of equilibrium advantage
In 1965, Bela Balassa first mentioned RCA to measure the degree of comparative advantage of one product over another, one country over another Until now, RCA has been used as an indicator used to measure comparative advantage
The RCA is determined by the following formula:
EXA Export of product X of country A
EA Total export of country A
EXW Export of product X of the world
EW Total export of the world
With RCA > 2.5, the product has a very high comparative advantage With 1 < RCA < 2.5, the product has a comparative advantage With RCA < 1, the product does not have a comparative advantage b Heckcher-Ohlin Theory
In the early 20th century, two economists Eli Heckscher and Bertil Ohlin developed the neoclassical theory of international trade, also known as the “Heckcher-Ohlin Theory” (H-O Theory) The H-O theory is built on two basic concepts, namely the content of elements and the abundance of elements This theory is built on the following assumptions:
The world consists of two countries, two factors of production (labor and capital), two commodities;
Production technology is the same across countries;
Production has a constant advantage of scale However, each factor of production has diminishing marginal productivity;
Products have different factors of production;
Factors of production move freely within country, but not across countries;
Free trade, zero shipping cost;
The H-O theory Governments that a country will produce a product whose production requires a relatively large use of the factor of production for which it is abundantly available
Explain international trade in terms intensive use of production factors
sometimes can't explain some real life situation, such as the Leontief paradox
1.1.2.2 Definition and the importance of agricultural products export a Definition of agricultural products export
There are many different definitions and interpretations of the export of goods Arcording to Investopedia (2021), “Exports are goods and services that are produced in one country and sold to buyers in another.”
According to Article 28, Clause 1, Commercial Law 2005: Export of goods means that goods are brought out of Vietnam's territory or brought into a special area located in the Vietnamese territory which is considered a separate customs area according to the provisions of law Therefore, export activities will be carried out on the basis of payment in the currency of one of the two countries, or the currency of a third party will be used as a basis for identification
From the above approaches, export of agricultural products can be understood as "the sale or exchange of agricultural products by a country to another country, in order to obtain economic benefits."
13 b Role of agricultural products export in Vietnam’s economy
Overview of exchange rate
In the process of world economic integration, in order for trade between two countries to happen smoothly, it is necessary to use the currency of one country or another, that is, to use foreign currency or other means that can foreign currency substitution However, with different economies, their currency strength also differs, so there is a need for an intermediary to convert one currency to another based on their value ratio
Exchange rate can be understood as the correlation of value between 2 different currencies Or it can be understood as the price of one unit of one country's currency expressed in terms of another country's currency
1.2.2.1 Based on the object to determine the exchange rate a Official exchange rate
The official rate is the rate determined by the central bank of that country On the basis of this exchange rate, commercial banks and credit institutions will set exchange rates for trading foreign currencies for exchange, term, and swap
The market rate is the exchange rate formed on the basis of supply and demand in the foreign exchange market
1.2.2.2 Based on payment term a Spot exchange rate
Spot exchange rate is the exchange rate quoted by a credit institution at the time of the transaction or as agreed by the two parties but must be ensured in the schedule prescribed by the Government bank Payment between the parties must be made within the next two business days, after the date of commitment to buy or sell b Forwards exchange rate
Forwards exchange rate is the transaction rate calculated and agreed upon by the credit institutions themselves, but must be within the prescribed range of the current forward rate of the Government Bank at the time of signing the contract
1.2.2.3 Based on the value of the exchange rate a Nominal exchange rate (NER)
According to the definition of NER on Investopedia, the nominal exchange rate (NER) is an unadjusted weighted average rate at which one country's currency exchanges for a basket of multiple foreign currencies The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency If a domestic currency increases against a basket of other currencies inside a floating exchange rate regime, NER is said to appreciate If the domestic currency falls against the basket, the NER depreciates b Real Exchange rate (RER)
(Kipici, 1997) defined the real exchange rate (RER) as the nominal exchange rate that takes inflation differentials across nations into account The RER between two currencies can be calculated by taking the nominal exchange rate (e) multiplied by the ratio of price of goods between the two countries (P/P*) (Cương, 2013)
According to Hoang Chi Cuong et al (2013), the real exchange rate was calculated by the following formula:
RERVND/CUR,t The real exchange rate between VND and currency of country j in year t eVND/CUR,t The nominal exchange rate between VND and currency of country j in year t
CPIVND,t The consumer price index of Vietnam in year t
CPICUR,t The consumer price index of country j in year t
Literature review of domestic and abroad researches
There has been an enormous amount of the literature researching about the linkages or the relationship between two or many time series dataset such as Gross Domestic Product, exchange rate, export-import turn over, energy consumption,… and they normally used models such as multiple linear regression (MLR) model, VAR model, VEC model, ARCH-family and GARCH-family models to find the relationship among time series variables
1.3.1 Literature review of abroad researches
(Doganlar, 2002); (Wang, 2007); (Serenis, 2012); (Devadoss, 2014); (Asteriou, 2016); (Senadza, 2017) and so on have investigated the impact of exchange rates on international trade and export in general, and agricultural product export in particular However, the outcomes of these works are mixed Doganlar (2002) and (Serletis, 2009) confirmed that Exchange rate volatility reduces real exports, and exchange rate
18 uncertainty has a considerable negative impact (Xie, 2008) confirmed that the affect of the domestic exchange rate can be negative, while the influence of the cross exchange rate is either positive or minor Other scholars, however, have not discovered the impact of exchange rates on specific export products According to the study of (Buguk, 2003) that the currency rate and its volatility have no substantial impact on Turkish exports of dried figs, grapes, and tobacco Except for Turkey, Asteriou et al (2016) found no long- term link between exchange rate volatility and foreign trade activity, and even in this case, the magnitude of the influence of volatility is rather tiny In the medium term, however, there is a considerable causal association between volatility and import/export demand for Indonesia and Mexico In the case of Nigeria, there is unidirectional causality from export demand to volatility, whereas in Turkey, there is no connection between volatility and import/export demand
1.3.2 Literature review of domestic researches
Exchange rate fluctuation, according to (Thuy, 2019), has a long-term detrimental impact on export volume The J curve effect shows that a decrease of the home currency affects negatively to the export value in the near run but in the long run it shows a positive sign
In contrast, when (To, 2015) used MLR model, cointegration test and Granger causality test to indicate and quantify the impact of some factors such as gasoline price, exchange rate, and world coffee price on Vietnamese coffee export price in the period of 2008-
2014, the key finding of this study was that gasoline prices and exchange rates would have a remarkable beneficial influence on Vietnamese coffee export prices
There appears to be a significant amount of empirical literature on the influence of exchange rates and volatility on international commerce and export However, the results are inconsistent In these investigations, the MLR model and the cointegration test are the most commonly used approaches According (Granger, 1974); (Hamilton, 1995); (Ferson, 2003) and (McCallum, 2010) The largest flaw in MLR models for estimating time-series data is false regression if, at level, the variables are not stationary
Furthermore, while there is evidence of the impact of exchange rates on the value of Vietnamese agricultural exports, this impact has not been thoroughly investigated
In order to address the limitations of the research subject and the lack of a MLR model in previous studies, this research determines to analyze the impact of the EUR/VND exchange rate on Vietnamese agricultural main product export value using new approaches such as Co-integration test, VAR/VEC model, and Granger causality test Based on economic theory, the hypothesis in this study is that there is a negative and substantial relationship between two selected variables, the nominal EUR/VND exchange rate and the value of Vietnamese agricultural major goods exported This indicates that when the VND/EUR exchange rate rises, the value of Vietnamese agricultural key items exported will fall
RESEARCH METHODOLOGY
Research objectives - Research questions
The research is conducted with three basic objectives Firstly, the situation of Vietnamese agricultural main products exports from Vietnam to EU market and the EUR/VND exchange rate in the period of 2015-2019 will be examined Secondly, the author continue to assess the impact of EUR/VND exchange rate (Ex) on Vietnamese agricultural main products exports (EVN) to the EU market by using cointegration test, Granger causality test, Vector Error Correction (VEC) model and Vector Autoregression (VAR) model Finally, from the above conducted analysis, some recommendations related to exchange rate and promoting Vietnamese agricultural main products exports to other markets in the coming years will be proposed.
Research hypothesis
The hypothesis in this study is that there is a negative and substantial relationship between two selected variables, the EUR/VND exchange rate and the value of Vietnamese agricultural main goods exported This indicates that when the VND/EUR exchange rate rises, the value of Vietnamese agricultural main products exported will fall
Table 2-1 Summary of some related literature review
(Baffes, 2003) Stationary test, cointegration test, ECM 10 commodities
(Chen, 2010) Granger-causality, multivariate regressions Commodities
The World food, and the World oil, CPI, food production index, GDP
(Busse, 2012) MS-VECM Diesel, biodiesel, soy oil, rapeseed oil
(Minot, 2010) TAR, ECM, VECM Commodities
Toda-Yamato linear and Diks–
(Rose, 2012) VECM Italian wheat, corn, soybean, crude oil
World oil price, 24 agricultural commodities,
US, China agricultural commodities, US/RMB exchange rate
(Shanmugam, 2016) Johansen’s Cointegration and regression model
Soybean, Chana, Maize, Jeera, and Turmeric
Research methodology
Quantitative methods will be used in this study since it is the most suitable approach with the research objectives, which are based primarily on secondary data sources According to (DeFranzo, 2011) there are different ways to utilize the quantitative research to quantify, measure, demonstrate and interpret the relationships between factors Therefore, through this approach, the influence of EUR/VND exchange rate on Vietnamese agricultural main products exports (EVN) to the EU market will be captured in form of metrics and statistics
The study will be using monthly data of Vietnamese agricultural main products (including rice, coffee, vegetables, pepper, natural rubber, tea) export value to EU market
(27 countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden) in the period of 2015-2019 (nx5`) Based on the information from the ITC, these products contributed to more then 97% of Vietnam’s agricultural products total value to EU market in 2019 With the aforementioned considerable weight, using the data of these selected products for the study is predicted to yield positive findings and contribute to Vietnam's agricultural main products total exports value
The variables in the study are derived from trustworthy data sources that have been confirmed by international organizations, including:
The World Trade Center (ITC) created the Trade Map (https://www.trademap.org/) as a search engine to store and disseminate data on import, export, and tariffs for each item in each region and territory (according to the Vietnam Chamber of Commerce and Industry - VCCI) As a result, for the dependent variable, the total export value of agricultural primary products will be consulted and collected in this source to assure credibility
The data of EUR/VND exchange rate in the period of 2015-2019 is collected from the International Monetary Fund (IMF) and TradeEconomics.com
Specific data sources are summarized in the table 2-2 below:
Table 2-2 Research data sources Observed variables Data sources
EVN International Trade Centre https://www.trademap.org
All the collected data then is converted in to the log-log equation for time series data processing and statistics of variables are described in table 2-3 below:
Source: Calculated by author using Microsoft Excel
The problem of spurious regression develops as a result of non-stationary tendencies in diverse time series data A non-stationary variable is one that has no propensity to revert to its previous value after a disruption Thus, the author begins by evaluating the stationary of all variables in terms of examing the influence of the exchange rate on the export value of Vietnamese agricultural major goods The stationarity of the model is assessed using the Augmented Dickey–Fuller (ADF) method:
Where: 𝛼 is a constant, 𝛽 is a temporal trend coefficient, and 𝜌 is the autoregressive process's lag order Imposing the constraints 𝛼 = 0 and 𝛽 = 0 relates to modeling a random walk, whereas using the constraint 𝛽 = 0 refers to modeling a random walk with a drift
The stationarity is checked using the following hypothesis based on the findings of the ADF unit root test:
𝐻 0 : 𝛾 = 0 : means that the variable is not stationary or has an unit root
𝐻 1 : 𝛾 < 0 : means that the variable is stationary or does not have an unit root
In the 1980s, Granger and Engle (1987) proposed the concept of cointegration The sequence X t is called a d-ordered single integer sequence, denoted as X t ∼ I(d), when the time series of the sequence (t = 1,2, ) becomes a stationary time series after d differences, and the sequence difference is d - 1 times If the two time series X t and Y t , both of which are I(d) Any linear combination of X t and Y t will be I(d) in general
However, if a vector exists such that the combination st = aX t + bY t is I(d - b) (d ≥ b ≥
0), then X t and Y t are said to be (d - b) order cointegrated The linear combination reflects
26 the long-term equilibrium relationship between the variables, which is the cointegration relationship, for non-stationary time series variables if part of their linear combinations are stationary
Testing cointegration is an important step in determining whether or not the model has empirically meaningful linkages If the two variables perform multiple trend lines, they can not lie in a fixed long-term relationship, which means the long-run can not be modeled, and standard distributions are rarely a valid basis for inference If cointegration cannot be discovered, working with variables in differences must be continued instead The Johansen (1990) approach or Engle and Granger (1987) three-step cointegration model can be used to examine the cointegration connection between variables
The author continues to do the Granger (1969) causality test, which assumes that all information regarding predicting y and x is included in these own variables time series The test necessitates estimate of the following regressions:
𝑥 𝑡 and 𝑦 𝑡 : are two selected variables;
𝑦 𝑡−𝑗 and 𝑥 𝑡−𝑖 : the lag of 𝑦 𝑡 and 𝑥 𝑡 , respectively;
𝛼 𝑖 , 𝛽 𝑗 , 𝑖 , 𝛿 𝑗 : lag term coefficient; i, j, q, s : order of lag;
𝑢 1𝑡 , 𝑢 2𝑡 : white noise and are believed to be unimportant
Equation (2) indicates that current y is related to both itself and the previous value of x, and Equation (3) assumes the same act for x For (2), the null hypothesis H 0: 𝛼 1 = 𝛼 2 ⋯ = 𝛼 s = 0; For (3), the null hypothesis H 0: 𝛿 1 = 𝛿 2 = ⋯ = 𝛿 s = 0 Values of P- probability will be used to make the decision to accept if P – probability value is greater than 5 percent or reject the null hypothesis
2.3.3.4 VAR model and VEC model
Sims (1980) established the VAR model as a technique that macroeconomists may use to characterize the joint dynamic behavior of a collection of variables without requiring stringent restrictions to identify underlying structural factors It has become a popular time-series modeling technique
The VAR model can be represented as follows:
𝑧 𝑡 : k-dimensional vector of the endogenous variable vector (k = 1, ,K); t : samples number; p : order of the lagged variable; v t : d-dimensional exogenous variable vector;
The (K x k) - dimensional matrix A 1 , , A p and (K x d) - dimensional matrix B are the coefficient matrices to be used for estimation 𝜀 𝑡 is a vector of k-dimensional disturbances
For the VAR model to absolutely capture the dynamic properties of the model, p and R- squared must broad enough However, it is questionable whether the larger p, the greater the model's freedom As a result, an equilibrium must be reached between p and R- squared, which can be estimated using the AIC and SC concepts A vector
28 errorcorrection (VEC) model is used when the variables of a VAR are co-integrated in the same order The following is a VEC model for two variables:
Stata 14.0 application will be used to estimate and evaluate all of the aforementioned hypotheses and models
2.3.3.5 Evaluation of reliability and accuracy data sources
According to (Joppe, 2000), dependability is the degree to which results remain consistent over time and accurately represent the overall findings of the research Furthermore, if the research results can be replicated using the same methods, the research instrument is regarded dependable According to Joppe (2000), accuracy is defined as determining if the study truly measured what it was supposed to measure or how accurate the research results were In general, researchers assess accuracy by asking a series of questions and looking for answers in previous studies The reliability and accuracy of the secondary data sources obtained and used in this paper will be evaluated in Table 2-4 below
International Trade Centre https://www.trademap.org (2)
Table 2-5 Reliability and accuracy of data sources
Criteria of data collection and data processing
Information on how to handle missing data
Information on how quality data is controlled
Information on how method is applied
Specifications about potential changes in procedures
Information about changes in methods used from one report to another
Information about changes in sources used from one report to another
Information about changes in definitions used from one report to another
Missing data can be taken TB T T T
31 research reports from other sources
Missing data can be partially taken from other sources
Missing data cannot be taken from other sources
Note: (T) Low; (C) High; (TB) Medium
Source: Based on Flintermann's standard criteria system (2014)
According to the summary table above, practically all data sources meet the accuracy and reliability standards for research purposes Most of the data acquired from the following two sources has few flaws and does not need to be confirmed with a new source when reporting the omission of research variables
Research results
Situation of Vietnam’s agricultural products export
3.1.1 Situation of Vietnam’s agricultural products export in the period 2015-2019
According to General Department of Customs statistics, by the end of September 2019, Vietnamese agricultural products were present in more than 160 countries and territories around the world, including export products worth more than one billion USD, such as coffee, rice, and vegetables, with a total value of 12.54 billion USD, a 7.9 percent decrease from the same period last year, corresponding to 1.07 billion USD Because Vietnam is still primarily an agricultural country, agricultural exports play a very important role in fostering social stability and enhancing farmers' quality of life, thereby contributing to the country's economic development Vietnam aims to be among the top
15 agricultural product exporters in the world with the existing agricultural products and the same potential in terms of natural and social circumstances
Total agricultural export turnover in 10 years (from 2008 to 2017) of our country reached about 261.3 billion USD, with an average growth rate of about 9.24%/year In particular, in 2017, the total export turnover of the country reached about 214 billion USD, of which the group of agricultural, forestry and fishery products reached nearly 37 billion USD (accounting for about 16.8%) Cashews is the industry of the second highest export value with $3.516 billion, followed by vegetables with $3.502 billion, coffee with $3.24 billion, and rice with $2.6 billion USD, pepper reached 1.1 billion USD, cassava and cassava products reached 1.03 billion USD…
3.1.2 Situation of Vietnam’s agricultural main products export to the EU market in the period 2015-2019
Figure 3.1 Vietnam’s agricultural main products export to the EU market in the period 2015-2019 Source: Author’s calculation
With 27 member countries and a population of about 516 million people, the European Union (EU) requires a considerable amount of goods, particularly agricultural products, from all over the world, including Vietnam Ranking 12th in the EU's ranking of agricultural product trading partners, Vietnam has the ability to satisfy 2.2 percent of the
EU market's demand for agricultural products (Hanoi moi Newspaper) On the Vietnamese side, EU is Vietnam's third largest market, accounting for 11 - 19 percent of overall agricultural export turnover and a yearly export value of more than $3 billion USD However, with a 2.2 percent market share, the value and turnover of Vietnam's y = 1E+06x + 3E+09
34 agricultural exports to the EU remain low in comparison to both Vietnam's export potential and the EU's import demand Coffee, tea, pepper, vegetables, rubber, and rice are the most important exports to the EU This group's export fraction accounts for more than 80% of Vietnam's agricultural export turnover to the EU
Coffee is Vietnam's agricultural product with the highest export turnover to the EU, accounting for 8.5 percent of the EU import value and over 40 percent of Vietnam's coffee exports In the period 2015-2019, the export value of coffee to the EU varies from 1.0 to 1.5 billion USD each year The majority of coffee sent to the EU is raw coffee, accounting for more than 90% of total export value
Figure 3.2 Vietnam's coffee export to EU market in 2015-2019
Pepper: The EU imports roughly 40,000 tons of Vietnamese pepper each year, accounting for 23 percent of Vietnam's overall exports and meeting 53 percent of EU
35 demand Vietnam exports primarily pepper (90 percent of total exports), with just 10 percent of processed pepper However, the value of pepper exports tends to fall rapidly between 2015 and 2019, from 236.3 million EUR in 2015 to 102 million EUR in 2019 Despite an increase in exports, this decline is primarily attributable to lowering pricing
Figure 3.3 Vietnam's pepper export to EU market in 2015-2019
Vegetables: Although the EU is Vietnam's fourth largest export market, Vietnam's vegetables account for a very small market share (approximately 1% of EU import demand for vegetables) Vietnamese vegetables are mostly sent to the EU fresh or partially processed The export value of Vietnam’s vegtables to EU has been increasing steadily from 10 million EUR in 2015 to nearly 15 million EUR in 2019
Figure 3.4 Vietnam's vegetables export to EU market in 2015-2019
Rice: Vietnam's rice has successfully entered the entire EU market However, rice exports to the EU account for a very minor fraction of Vietnam's total agricultural exports to the EU (0.7 percent) In 2019, Vietnam sold 26.2 million EUR worth of rice to the
EU In comparison to ASEAN countries, Vietnam's rice exports to the EU are just one- sixth of Thailand's, one-tenth of Myanmar's, and one-quarter of Cambodia's
Figure 3.5 Vietnam's rice export to EU market in 2015-2019
Tea: The EU 27 is the world's largest tea import market However, the EU remains a prospective and vital market for Vietnam's tea sector because the EU's tea import demand is quite high, but the fraction of Vietnamese imports is still relatively low the value of pepper exports tends to fall rapidly between 2015 and 2019, from around 8 million EUR in 2016 down to just nearly 3.4 million EUR in 2019
Figure 3.6 Vietnam's tea export to EU market in 2015-2019
Rubber: In 2019, Vietnam's rubber industry has risen to the 4th position in terms of exports in the world natural rubber market As of 2019, Vietnam ranked 13th in the world in terms of supplying rubber and rubber products to the EU market This area currently accounts for 39% of the total value of Vietnam's tube exports to the world The EU currently mainly imports rubber and intra-regional rubber products since 2015 and has remained in the range of 68-69% since 2015 Vietnam's market share in EU imports of rubber and rubber products has increased from 0.4% in 2015 to 0.7% in 2019, showing a significant improvement in competitiveness However, Vietnam is still only ranked 4th among ASEAN countries in terms of market share of rubber and rubber products in the
Figure 3.7 Vietnam's rubber export to EU market in 2015-2019
General remarks on the situation of agricultural exports to the EU: although Vietnam has exported agricultural products to the majority of EU countries, the market share of Vietnamese agricultural products in the EU market is still very small; agricultural products are primarily exported in raw form, which is competitive in the low price segment This demonstrates that Vietnam has not taken full advantage of its advantages in exporting to the EU market
Situation of EUR/VND exchange rate in the period of 2015-2019
Figure 3.8 EUR/VND exchange rate in the period of 2015-2019
The EUR/VND exchange rate steadily increased over the period of 2015-2019, from 24,001.9 VND per EUR in January 2015 to 25,990.9 VND per EUR in December 2019 With the positive 𝛼 coefficient in the Linear trendline, the chart has shown an upward trendline of the EUR/VND exchange rate over the selected period.
The influence of EUR/VND exchange rate (Ex) on Vietnamese agricultural main
Before conducting the stationary test, it is required to determine whether the two selected variables fluctuation is on a trend and/or having an intercept Figure 3.9 depicts how the y = 49.197x + 24064
41 stationary test of the two variables will be carried out with interception and ascending trendline
Figure 3.9 log-log equation of EUR/VND exchange rate and Vietnamese agricultural main products export value to EU market in 2015-2019
The prior analysis findings show that the two series are considered to be stationary Should be more cautious, (Schwert, 2002) l max = 10, uses ten lagged differences to evaluate the stationarity of variables The augmented Dickey–Fuller (ADF) is used to test stationarity Table 3-1 summarizes the ADF test findings at the level and first difference The null hypothesis 𝐻 0 for the test is unit root for each variable
Jan -1 5 A pr -1 5 Jul-1 5 O ct-1 5 Jan -1 6 A pr -1 6 Jul-1 6 O ct-1 6 Jan -17 A pr -1 7 Jul-1 7 O ct-1 7 Jan -1 8 A pr -1 8 Jul-1 8 O ct-1 8 Jan -19 A pr -1 9 Jul-1 9 O ct-1 9
Variables Lags ADF t-statistic 1% critical value
Note: D represents the first-order difference to the time series
Source: Author’s calculation using Stata
According to the Unit root test results in Table 3-1, the ADF test-statistic results for both variables are less negative then the 5% critical value (LEx: -1.876 > -2.933; LEVN: -2.046 > -2.933) Thus, the two selected variables are non-stationary at the level, implying that the two series have a unit root Taking the first difference, the two non-stationary series were tested again Both variables are stationary at first difference after the test with 5% level since the ADF test-statistic results are more negative then the 5% critical value (DLEx: -3.143 < -2.938; DLEVN: -4.036 < -2.936) It denotes that all variables are
43 integrated in the same sequence As a result, we can perform a cointegration test on all of the variables
The Johansen approach is used to calculate cointegration rank Johansen's method yields two cointegration rank likelihood estimators: a Trace test and a Maximum Eigen's value test
Table 3-2 Unrestricted Cointegration Rank Test (Trace)
Maximum Rank Eigenvalue Trace statistics 5% critical value
Note: Trace test indicates 1 cointegrating equation(s) at the 0.05 level
Table 3-3 Unrestricted Cointegration Rank Test (Maximum Eigenvalue)
Maximum Rank Eigenvalue Max-eigenvalue 5% critical value
Note: Max-eigenvalue test indicates 1 cointegrating equation(s) at the 0.05 level Source: author’s calculation using Stata
The hypothesis is governmented as:
The cointegration test findings in Table 3-2 and Table 3-3 reveal that both the Trace statistic and Max-eigenvalue are higher then 5% critical value (Trace statistic: 20.3425
> 15.41; Max-eigenvalue: 17.3800 > 14.07) at rank 0, implying there exists one cointegrating equation at the 0.05 level among two variables Thus, rejected the null hypothesis It signifies that the two selected variables have one long-term relationship from 2015 to 2019 The author will proceed to estimate VEC model change for VAR model based on this finding
3.3.3 Determine the lag length upon VAR model
The author prioritize the lowest of the six criteria The lag length is calculated using the
LR (likelihood ratio), FPE (final prediction error), AIC (Akaike information criterion),
SC (Schwarz information criterion), and HQ (Hannan–Quinn information criterion) (see Table 3-4)
Table 3-4 Determine the lag length
Lag LogL LR FPE AIC SC HQ
Source: author’s calculation using Stata
The research continue to be tested with lags (1) based on Table 3-4 with “*” indicators
3.3.4 Vector Error Correction Model (VEC model)
The development of cointegration among variables indicates the presence of a long-run relationship As a result, the VEC model can be used
Table 3-5 Vetor Error Correction model results
Note: The sign of the coefficients are reversed in the long-run
Source: author’s calculation using Stata
The results of Table 3-5 can be written as below:
D_LEVN = - 0.4709207 x LEx_1 - 0.0739641 x LEVN_1 + 0.0001346 + 𝜀 𝑡 (*) D_LEx = 0.1141947 x LEx_1 - 0.0104837 x LEVN_1 - 0.0019336 + 𝜀 𝑡 (**)
It is demonstrated in (*) that the preceding period's EUR/VND exchange rate has a considerable long-term influence on Vietnamese agricultural principal product exports to the EU market If LEx_1 increases by one percent, D_LEVN decreases by 0.4709207 percent This is followed by the prior period's Vietnamese agricultural major product export with a coefficient of -0.0739641 This means that a one percent rise in LEVN_1 will result in a 0.0739641 percent drop in D_LEVN In terms of action, all of the
47 independent factors have a negative long-run influence on Vietnamese agricultural major product exports to the EU market As a result, the hypothesis of the study is accepted
In long-term relationship, there is existing a negative relationship between the EUR/VND exchange rate and Vietnamese agricultural principal product exports to the
EU market This finding is backed by the fact that, in the long run, the higher the exchange rate, the more difficult it is for Vietnamese farmers to implement new technology, new machinery, and current processes into the industry, which we must purchase from the EU Furthermore, there is a negative relationship between D_LEVN and LEVN_1, implying that the Vietnamese agricultural main products exported to the
EU market in the previous period midly reduced the total export value of itself because Vietnamese agricultural products are seasonal , and the more we export to the EU market, the greater the pressure to meet domestic demand in the following period
(**), on the other hand, demonstrated a somewhat negative association between the
EUR/VND exchange rate and the total value of Vietnamese agricultural major product exports to the EU market in the previous period A 1% increase in LEVN_1 translates in a 0.0104837% decrease in D_LEx While the previous period's exchange rate has a positive impact on itself, if LEx_1 rises by one percent, D_LEx rises by 0.1141947 percent Because the goal of this research is to determine the influence of exchange rates on Vietnam's agricultural main products exports to the EU market, the study will not delve into these consequences any further
All of coefficients are statistically significant at 1% level With a thoroughly reviewed results from test, the impact of LEx_1 explains 85 percent of the variability of the D_LEVN
3.3.5 Vector Autoregressive model (VAR model)
After the appropriate results from the VEC model align with null hypothesis, the author continue to test the relationship of the two selected variables in short-term using the Vetor Autoregressive model
Table 3-6 Vector Autoregressive model results
Source: author’s calculation using Stata
The findings in Table 3-6 can be written as below:
LEVN = 0.1450026 x LEx_1 + 0.4126402 x LEVN_1 + 11.3675 + 𝜀 𝑡 (***) LEx = 0.916899 x LEx_1 - 0.0338289 x LEVN_1 + 1.584291 + 𝜀 𝑡 (****)
It is clearly demonstrated in (***) that, in short run, the influence of the Vietnamese agricultural main products export to the EU market in the last period on it own self is considered to be momentous An increase in LEVN_1 by 1 percent will make the LEVN rise up 0.4126402 percent, followed by the impact of the EUR/VND exchange rate in the previous period with the coefficient of 0.1450026 This suggests that if LEx_1 increases by 1%, it will lead to a less significant rise of the LEVN by 0.1450026 percent
All of the independent factors have a positive effect on Vietnamese coffee export price in terms of direction As a result, the study's hypothesis is rejected In short-term relationship, there is existing a positive relationship between the EUR/VND exchange rate and the Vietnam agricultural main product exports to EU market In this regard, an increase in the exchange rate means that Vietnam agricultural main products become substantially cheaper in comparison to domestic goods from importing nations, facilitating Vietnam agricultural main product exports
In contrast, (****) revealed a mildly negative relationship between the EUR/VND exchange rate and the total value of Vietnamese agricultural main products exports to the EU market in the previous period in short run A one percent rise in LEVN_1 results in a 0.0338289 percent decrease in LEx While the exchange rate in the previous period has a positive impact on itself, if LEx_1 rises by one percent, LEx rises by 0.916899 percent Because the goal of this research is to determine the influence of exchange rates on Vietnam's agricultural main products exports to the EU market, the study will not delve into these consequences any furtherAll of coefficients are statistically significant at 1% level
The impact of independent factors explains 84.96% of the variability of the dependent variable, according to the thoroughly examined results of this test In terms of the magnitude of impact of variables, it is pretty compatible with the reality of Vietnamese agricultural main products exports In other words, the previous period's EUR/VND exchange rate has a significant impact on Vietnamese agricultural principal product exports to the EU market Furthermore, with an influence coefficient of 0.1450026, the previous period of Vietnamese agricultural major product exports to the EU had a minor effect on the dependent variable However, Vietnamese agricultural main product exports to the EU market have little effect on the VND/USD exchange rate It is only influenced by the lag (1) of itself
Despite of not having identified the causal relationship direction in the cointegration test, theory of economics ensures that Granger causality exists in at least one direction at all times To confirm the causal relationship between two variables, a lag (1) Granger causality test is performed Table 3-7 displays the evaluation results for Granger causality between LEx and LEVN The authors examine the causality among the variables using P-probability, considering the null hypothesis that none of those variables have a Granger causation
Table 3-7 Granger Causality test results
LEx does not Granger cause LEVN
LEVN does not Granger cause LEx 0.687
Source: author’s calculation using Stata
From the investigation, the null hypothesis will be fully rejected if the P-probability value is smaller than 0.05, otherwise, it will be accepted Then, at the 5% significant level, with the probbability coefficient of 0.047, the null hypothesis LEx does not Granger cause LEVN implies LEx has a unidirectional - Granger causation with LEVN, but not vice versa (the coefficient for the null hypothesis LEVN does not Granger cause
LEx is 0.687 > 0.05) The association discovered between the EUR/VND exchange rate and Vietnamese agricultural main product exports to the EU market is accurate, as are the results of the VAR and VECM models
Conclusion and some recommendations
Conclusions
The study capture the effect of EUR/VND exchange rate on Vietnamese agricultural main products export value to EU market by using Co-integration test, VAR/VEC model, and Granger causality test in an effort to overcome the research subject's constraints and the lack of a multiple regression model in earlier studies On that basis, the following are the study's primary conclusions:
First, the study investigated the situation of both the EUR/VND exchange rate and the value of Vietnamese agricultural main products exported to the EU market from
2015 to 2019 by determining the stationary of both time series and came to the conclusion that the two time series of selected variables are not stationary at the level but becomes stationary at the first difference It signifies that two variables have been integrated in the same order
Second, the Johansen Cointergration test indicates that there is only one cointegrating equation among variables, indicating that there exists a long-term relationship between
EUR/VND exchange rate and the value of Vietnamese agricultural main products exported to the EU market
Third, the author used the VAR and VEC models to analyze the relationship between all variables in the short and long run The results of the two models demonstrate that: In the long term, a negative association between the two variables has been discovered, supporting the null hypothesis of the research In contrast, the short-run relationship test rejects the null hypothesis when it indicates that the EUR/VND exchange rate provides significant support to the value of Vietnamese agricultural major items exported to the EU market
Fourth, in terms of causal link, the Granger causality test investigated a one-way causation from the EUR/VND exchange rate to the value of Vietnamese agricultural principal items exported to the EU market but not vice versa
4.2 Some recommendations to improve Vietnamese agricultural products export to the EU market and enhance competitiveness of Vietnamese agricultural industry
To begin, regarding the export orientation of agricultural products Vietnam has identified a group of products with strengths of Vietnam, from which to focus on promoting exports to the EU, including: coffee, rice, pepper, vegetables, rubber To promote the export of these agricultural products to the EU market, we need to develop organic agricultural products, clean agricultural products, and need to increase processing to create added value for processed agricultural products variable Therefore, it is necessary to continue promoting the restructuring of the agricultural sector in the direction of developing commodity agricultural production for export governments must improve support for agricultural firms and farmers producing agricultural products such as coffee, rice, and rubber, by constructing infrastructure, creating quality human resources, and attracting investment capital This strategy seeks to prevent disadvantages when prices, supply, and the currency rate fluctuate Farmers today primarily require new modern technology to apply to farming, which puts significant pressure on prices The Government needs to continue to perfect the land policy in the direction of encouraging the accumulation of land for large-scale production In which, perfecting regulations on supporting enterprises to access land to organize the production and processing of agricultural products for export, especially investment projects in deep processing of products, continuous production clusters - preliminary processing - preservation - processing of agricultural products
Second, the EUR/VND exchange rate has a negative impact on Vietnamese agricultural exports to the EU market As a result, governments must improve the quality of market
54 forecasting and assessment; closely monitor the situation in the EU market; and identify and capitalize on opportunities in other potential markets in order to reduce dependence and raise export turnover Especially in the context of continually altering economic conditions, the EUR/VND exchange rate frequently changes unexpectedly As a result, accessing and comprehending these shifts will transform dangers into opportunities for enterprises and farmers to "break through."
Finally, one of the research findings indicates that, in the short run, an increase in the EUR/VND exchange rate will benefit Vietnamese agricultural products export to the EU market; thus, the Government needs to have policies to support businesses and farmers in terms of trade information through the development of a market information system, trade promotion, strengthening of market analysis and forecasting the exchange rate, and policies in different short periods Create favorable conditions for enterprises to organize trade promotion and market development activities, support Vietnamese enterprises to directly participate in production and distribution networks abroad
Furthermore, by taking the initiative to write and execute international rules, negotiate contracts with partners, and readily take advantage of conducting business in local markets, Vietnam's commercial legal system will provide favorable conditions for the process of global economic integration After the law is implemented, businesses will require government assistance and support in implementing international quality standard systems and social standards, particularly in the agriculture industry To satisfy the expanding requirements of the international market, relevant stages and sectors must integrate the program of knowledge dissemination and awareness raising with the implementation and registration of certifications for firms
Firstly, Vietnamese agricultural enterprises must select an appropriate method for actively entering the EU market's distribution channels, specifically: I establishing close
55 relationships with distribution centers and large supermarkets in the market for direct export, minimizing the situation of exporting through intermediaries
(ii) Forming joint ventures through the use of well-known brand licenses and trademarks
In addition to direct export or export joint ventures, Vietnamese agricultural firms must investigate direct investment to improve market penetration
Second, with the EUR/VND exchange rate having a negative long-run impact and a positive short-run impact, Vietnamese firms and farmers must have flexible production and planning plans in order to utilize or reduce the impact of the EUR/VND exchange rate at various phases
Third, collaborate with domestic agricultural firms that produce and export agricultural products Small and medium-sized businesses must collaborate to lessen internal competitive pressures within industries and boost worldwide competitiveness
In addition to the solutions listed above, businesses and farmers must focus on organizing production and reducing production costs; researching and applying advanced production technologies and management software to improve labor productivity, mobility, and competitiveness; capitalizing on opportunities to attract orders; effectively maintaining and exploiting traditional customers and developing new ones; contributing to the stabilization of production and ensuring job security Furthermore, firms should focus on developing strategic relationships with clients who are significant retailers and importers around the world; participating in their link chains to stabilize orders and consumers; and gaining access to their management and business knowledge.
Limitations of the research and future research development
In conclusion, the novel discoveries of this study help to improve time series data investigations both in practical and theoretical In terms of value in theoretical, this study used the Cointegration test, the Granger causality test, the VEC model, and the VAR model to provide additional evidence validating the existence of a relationship between
56 the EUR/VND exchange rate and the export of Vietnamese agricultural main products to the EU market In terms of practical implications, the findings of this finding can assist the Vietnam Government, agricultural enterprises, and farmers in better understanding the transmission mechanism of the influence of EUR/VND exchange rate on Vietnamese agricultural main product exports in order to develop appropriate strategies
Firstly, purposeful sampling limited the scope of the study, resulting in a relative and generalized outcome In other words, in addition to the findings of this study, the Vietnamese government and exporting companies must conduct research on a variety of other specific aspects of exports, such as infrastructure development, transportation in Vietnam, the impact of domestic demand, competition from other exporters, and so on
To improve generality, future research should employ a larger sample size, broaden the scope of research to many more nations and agreements, and extend the study term to show a clear shift in export value, allowing for more authentic conclusions
Secondly, the lack of independent variables leads to subjective assessment on the fluctuation of Vietnamese agricultural main product exports In addition, the selected time period in this research may have been too trivial to capture the true influence of EUR/VND exchange rate to Vietnamese agricultural main product exports to EU market Thus, future investigation can relies on these limitation to expand the study for a better understanding or finding new insights
Finally, the study focuses on exporting agricultural primary items (such as rice, rubber, coffee, vegetables, tea, and pepper) in order to propose exports for the entire industry Including more goods in the survey will provide a more objective and accurate assessment of Vietnamese agricultural exports in general
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Test 1% Critical 5% Critical 10% Critical Interpolated Dickey-Fuller Augmented Dickey-Fuller test for unit root Number of obs = 49
Z(t) -2.046 -3.587 -2.933 -2.601 Statistic Value Value Value Test 1% Critical 5% Critical 10% Critical Interpolated Dickey-Fuller Augmented Dickey-Fuller test for unit root Number of obs = 49
Z(t) -3.143 -3.600 -2.938 -2.604 Statistic Value Value Value Test 1% Critical 5% Critical 10% Critical Interpolated Dickey-Fuller Augmented Dickey-Fuller test for unit root Number of obs = 47
Z(t) -4.036 -3.594 -2.936 -2.602 Statistic Value Value Value Test 1% Critical 5% Critical 10% Critical Interpolated Dickey-Fuller Augmented Dickey-Fuller test for unit root Number of obs = 48
0 6 172.18627 17.3800 14.07 rank parms LL eigenvalue statistic value maximum max critical
0 6 172.18627 20.3425 15.41 rank parms LL eigenvalue statistic value maximum trace critical
Sample: Mar-15 - Dec-19 Lags = 2Trend: constant Number of obs = 58 Johansen tests for cointegration
0 106.123 000053 -4.16492 -4.13579 -4.08844 lag LL LR df p FPE AIC HQIC SBIC Sample: Nov-15 - Dec-19 Number of obs = 50 Selection-order criteria