(Luận văn) the impact of food safety standards on rice exports from vietnam

t to ng hi ep INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM NETHERLANDS UNIVERSITY OF ECONOMICS w n lo ad ju y th yi pl VIETNAM – NETHERLANDS n ua al PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS n va ll fu m oi THE IMPACT OF FOOD SAFETY STANDARD nh at ON RICE EXPORT FROM VIETNAM z z k jm ht vb om l.c BUI MINH KHOI gm By an Lu n va MASTER OF ARTS IN DEVELOPMENT ECONOMICS ey t re th Ho Chi Minh City, November 2015 ABSTRACT This paper investigates the impact of food safety standard on rice export from Vietnam t to The study covers 154 countries in the UN Comtrade data website from 2003 to 2013 and uses ng hi aflatoxin B1 to present for food safety standard The findings confirm that there is a negative ep impact of food safety standard on rice export from Vietnam Moreover, there is an existence of self – selection bias in the data Although Vietnam has exported rice to 154 countries in all over w n the world, there are some countries that not import rice of Vietnam In other words, Vietnam lo ad does not export to those countries The reasons for this problem could be that those countries y th set low maximum allowable of aflatoxin B1 or the citizens of those countries not eat low – ju value rice from Vietnam Besides, high-income countries will import less rice compared to yi lower income countries The reason for this issue could be that rice is a staple goods and the pl ua al demand of rice depends on culture and habit of people in importing countries Another finding is that joining WTO or signing FTA could lead Vietnam to export more rice to other countries n va However, this is only a signal, this issue should be considered in depth in future researches by n using higher econometric methodologies ll fu oi m Keywords: food safety standard, rice export, Vietnam at nh z z k jm ht vb om l.c gm an Lu n va ey t re i ACKNOWLEDGEMENT Foremost, I would like to sincerely and gratefully thank Dr Tran Tien Khai, my t to supervisor, for his great support, crucial advice and precious during my thesis finish Without ng his guidance, I am unable to finish this thesis hi ep Besides, I would like to thank Dr Truong Dang Thuy, who also gave me useful advice when I got stuck in doing thesis More special thanks to the Vietnam – Netherlands Programme, w n especially professors and staffs for their help during my thesis process lo ad Furthermore, I would like to thank all my friends, including my high school friends, my y th university friends, my group and some brothers in K20 All of them always beside me to ju encourage, help me when I got stuck in doing thesis and want to give up Without them, I yi pl cannot finish this thesis al ua Last but not least, I would like to thank my family for their sacrifices for supporting me n not only in doing thesis but also in my life n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re ii ABBREVIATIONS t to ng hi ASEAN The Association of Southeast Asian Nations CEPII The Centre d’Études Prospectives et d’Informations Internationales EEC European Economic Community ep EFTA European Free Trade Association EU The European Union w n Foot – and Mouth – Disease ad FMD Food Agricultural Organization lo FAO Free Trade Agreement ju General Agreement on Tariffs and Trade yi GATT y th FTA pl Hazard Analysis Critical Control Point MRLs Maximum Residue Limits of Pesticides NTBs Non – Tariff Barriers SPS Sanitary and Phytosanitary TBT Technical Barriers to Trade TRAINS The UNCTAD Trade Analysis Information System UN Comtrade The United Nations Commodity Trade Statistics Database WTO World Trade Organization n ua al HACCP n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re iii TABLE OF CONTENTS ABSTRACT i t to ACKNOWLEDGEMENT ii ng hi ABBREVIATIONS iii ep TABLE OF CONTENTS iv w LIST OF TABLES vi n lo LIST OF FIGURES vii ad ju y th CHAPTER 1: INTRODUCTION Problem Statement 1.2 Research Objectives 1.3 Research Questions 1.4 Data and Methodology 1.5 Thesis Structure 10 yi 1.1 pl n ua al n va ll fu oi m CHAPTER 2: LITERATURE REVIEW 11 Some Concepts 11 at nh 2.1 Food Safety Standards 11 2.1.2 Aflatoxin B1 11 z ht vb Theoretical Literature 12 k jm 2.2 z 2.1.1 Food safety standards 12 2.2.2 Theory of Gravity Model 17 l.c gm 2.2.1 Empirical Literature 18 2.4 Hypothesis Testing 23 om 2.3 an Lu Model Specification 24 3.2.1 Constructing Dependent Variable 25 3.2.2 Model 25 iv ey 3.2 t re Data Source 24 n 3.1 va CHAPTER 3: DATA AND METHODOLOGY 24 3.3 Estimation Strategy and Correction Model 29 t to 3.3.1 Panel Data Method 29 3.3.2 Heckman Sample Selection Bias Method 32 ng hi CHAPTER 4: OVERVIEW OF VIETNAMESE RICE EXPORT, FOOD SAFETY ep STANDARD FOR RICE, AND EXPORT’S DETERMINANTS 36 4.1 Overview about the Posture of Vietnamese Rice Export 36 w Food Safety Standard Applied for Rice 40 lo ad 4.3 n 4.2 Determinants of Vietnamese Rice Export 43 y th Regression Results of OLS, FE, RE, and Driscoll – Kraay Standard Errors 43 4.3.2 Regression Results of Heckman Sample Selection Bias Model 48 ju 4.3.1 yi pl ua al CHAPTER 5: CONCLUSION 54 Main Findings 54 5.2 Policy Implications 55 5.3 Limitations and Future Research 55 n 5.1 n va ll fu oi m REFERENCES 57 nh at APPENDICES 61 z z k jm ht vb om l.c gm an Lu n va ey t re v LIST OF TABLES Table 4.1: Regression Results of OLS, FE, RE, Driscoll – Kraay Standard Errors for OLS and t to FE 46 ng hi Table 4.2: Regression Results of Heckman Maximum Likelihood, Heckman Two – Steps and ep Heckman Maximum Likelihood with Clustered 52 w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re vi LIST OF FIGURES Figure 2.1: Tariff and NTBs 14 t to Figure 2.2: Analytical Framework of Trade and Determinant Factors 22 ng hi Figure 4.1: Average Export Quantity of Vietnamese rice 37 ep Figure 4.2: Average Export Value of Vietnamese Rice 38 w Figure 4.3: Average Export Quantity of Vietnamese Rice to Continents in 2003 – 2013 39 n lo Figure 4.4: Average Allowable Level of Aflatoxin B1 of Continents in 2003 – 2013 40 ad ju y th Figure 4.5: Food Safety Standard and Export Quantity of Vietnamese Rice to Continents 41 Figure 4.6: Average GDP per capita and Export Quantity of Vietnamese Rice 42 yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re vii t to CHAPTER 1: INTRODUCTION ng hi 1.1 Problem Statement ep Food safety standard is an emerging issue in recent years Especially, imposing food safety w standards could be a signal for consumers that product is safe, but in parallel, if this is a n lo protectionist way of importing countries (developed countries), it could impede trade (Disdier et ad al., 2008) The latter is more concerned regarding developing countries compared to the former y th Most of importing countries (developed countries) use food safety standard as a tool to protect ju yi their domestic producers Thus, developing countries face many challenges to export food to pl developed countries as well as meet the requirements of food safety standards imposed by al ua importing countries In the perspective of global trade, goods of a country have to compete with n many other countries’ Therefore, consumers are faced with importing foods that are supplied by va n unclear suppliers These problems are real, but in parallel, this could lead to an impediment in fu ll trade (van Veen, 2005) The weakness in physical infrastructure and high possibility to be infected m oi by disease could make developing countries that face more challenges than developed countries at nh (Henson & Jaffee, 2008) Thus, developing countries should view food safety standards not just as a tool for impeding imports of developed countries but as an opportunity to enhance the quality z z of foods (Jongwanich, 2009) However, he also argues that developing countries are hard to meet vb the requirements of food safety standard imposed by developed countries compared to developed ht jm countries There are many papers that measure the effect of food safety standards on food export k from developing countries such as Jongwanich (2009), Ferro et al (2013) or from African gm l.c countries like Otsuki et al (2001a, 2001b) and Wilson and Otsuki (2001) However, doing research about food safety standards for Asia, ASEAN are very rare, especially for Viet Nam Thus, it is om necessary to analyze this problem in the case of Vietnam when Vietnam is an agricultural country an Lu In this study, the impact of food safety standard on rice export from Vietnam is the main agricultural goods of Vietnam, those studies are for fish products such as Henson et al (2000) food safety standard and export from developing countries However, those studies have never th al (2008), Jongwanich (2009) and Ferro et al (2013) that find a negative relationship between ey Vietnam Many papers such as Otsuki et al (2001a, 2001b), Wilson and Otsuki (2001), Disdier et t re There is practically no research that measure the impact of food safety standard on rice export from n va research objective Although there are several papers that studied the food safety standard for t to applied for Vietnamese case Hence, by measuring the impact of food safety standard on rice ng export from Vietnam, this study could be a shed light to the situation of Vietnamese rice export hi ep By drawing the results, this research aims to give a better understanding about the food safety standard and export from developing countries like Vietnam From there, future studies could w research for a different type of Vietnamese agricultural products to help Vietnamese agricultural n lo goods could export more to high quality as well as stickiness markets such as EU, USA or Japan ad y th 1.2 Research Objectives ju The objective of this study is to find out the impact of food safety standard on rice export yi pl from Vietnam n ua al 1.3 Research Questions va For reaching research objective, this study focuses only one research question: Does food n safety standard have a negative impact on rice export from Vietnam? ll fu 1.4 Data and Methodology oi m This study uses the manually collected panel data of 154 countries on UN Comtrade from nh at 2003 to 2013 The quantity of rice is collected from UN Comtrade website, rice is coded by z Harmonized System - HS 1006 Besides, the data of food safety standard is obtained from an FAO z ht vb publication: “Worldwide Regulations for Mycotoxins (2003): A Compendium” Moreover, GDP jm per capita and openness are collected annually from World Bank Further, CEPII and FAO k websites provide the data of distance and domestic consumption of rice, respectively The data of gm tariff is gathered from TRAINS database WTO and FTA are referred from World Trade l.c Organization and Asia Regional Integration Center websites The OLS, Fixed Effects (FE), om Random Effects (RE), Driscoll – Kraay Standard Errors for OLS and FE, Heckman Maximum an Lu Likelihood and Heckman Two – Steps will be used to estimate the impact of food safety standard on rice export from Vietnam The results of Heckman Maximum Likelihood and Heckman Two – ey t re Errors for OLS and FE will be used as the comparative results Cluster – Robustness Check will n va Steps are considered the main results While the OLS, FE, RE, and Driscoll – Kraay Standard be used to strengthen the findings th t to we could find another contaminant applied for rice or collect data of MRLs from Agrobase – ng Loligram’s Homologa website to present for food safety standard Besides, since this research only hi ep measures the food safety standard applied for rice, in future researches, we could measure food safety standard for other types of agricultural products w The third limitation of this study is the endogenous relationship of trade and GDP per capita n lo As we know, GDP per capita could effect on trade and conversely, the trade could also impact on ad GDP per capita However, exploring this problem is not the aim of this study, so that this problem y th could be seen as an issue which could be investigated in future researches ju yi The fourth limitation of this thesis is that this thesis does not control the consumption pl behavior of consumers in different countries In other words, there are some countries that have al n ua eaten rice habit, while some countries eat more wheat and potato instead However, because of the va limitations of the food safety standard dataset, this thesis is unable to solve this problem In n particular, since aflatoxin B1 does not change after 2003, except some cases of the European Union fu ll members, groups of countries could not be separated to run a regression and improve the estimation m oi results Therefore, in future research, a new database of food safety standard should be considered at nh to deal with this problem z Last but not least, in this research, we could see signals of joining WTO or signing FTA z vb could lead to a higher rice export from Vietnam to other countries However, to measure these jm ht problems in depth, we should use another method such as the difference in difference (DID), treatment effects, etc By that way, we will have a clarified investigation about whether joining k om l.c gm WTO or signing FTA could lead to a higher rice export from Vietnam to other countries an Lu n va ey t re th 56 t to REFERENCES ng hi Aitken, N D (1973) The effect of EEC and EFTA on European trade: A temporal cross-section ep analysis The American Economic Review, 881-892 Anderson, J E (1979) A theoretical foundation for the gravity equation The American Economic w n Review, 106-116 lo Anderson, J E., & van Wincoop, E (2003) Gravity with Gravitas: A Solution to the Border ad y th Puzzle American Economic Review, 93(1), 170-192 ju Antle, J M (1999) Benefits and costs of food safety regulation Food policy, 24(6), 605-623 yi Baltagi, B (2008) Econometric analysis of panel data (Vol.1) John Wiley & Sons pl Beghin, J C., & Bureau, J C (2001) Quantification of sanitary, phytosanitary, and technical al va 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