Overview of the Banana Industry in VietnamThe banana export industry in Vietnam has experienced significant growth and hasbecome a prominent player in the global banana trade.. Other imp
FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS *** MID-TERM REPORT Factors Affecting Vietnam’s Banana Export (HS-080390) During The Period 2013 - 2021 Instructors: Tran Nguyen Chat Researcher: Đồng Nhật Quỳnh Như - 2011155437 Lê Đức Duy - 2011155116 Nguyễn Quang Minh - 201115323 TABLE OF CONTENT INTRODUCTION Rationale of the research Literature Review: Aims and Objectives .7 3.1 Aims 3.2 Objectives Scope of the research Research methods Structure of the research CHAPTER I: OVERVIEW OF BANANA EXPORT IN VIETNAM 1.1 The Importance Of Export In Vietnam Economy 1.2 Overview of the Banana Industry in Vietnam 1.2.1 Production and Varieties: 1.2.2 Export Markets: 11 1.2.3 Quality and Standards: 11 1.2.4 Challenges and Opportunities: 13 CHAPTER II: FACTORS AFFECTING VIETNAM’S BANANA EXPORT 14 2.1 Economic Factors 14 2.1.1 Market demand and consumer preferences 14 2.1.2 Impact of bilateral and multilateral trade agreements 15 2.1.3 Tariffs, quotas, and non-tariff barriers 17 2.2 Agricultural Factors 19 2.2.1 Banana production and quality 19 2.2.2 Cultivation practices and techniques 19 2.2.3 Pests and disease control 21 2.2.4 Transportation and logistics 23 2.3 Environmental Factors 25 2.3.1 Climate and geographical suitability for banana cultivation 25 2.3.2 Environmental sustainability practices in banana production 26 2.3.3 Impact of climate change on banana production and exports 27 2.4 Government Support and Initiatives 28 2.4.1 Role of government policies and Incentives .28 2.4.2 Support for research and development .29 2.4.3 Promotion of international trade and export assistance programs 29 2.5 Gravity Model 30 2.5.1 Purpose Of Gravity Model .30 2.5.2 Data Definition 31 2.3 Analysis Of Empirical Results 36 CHAPTER III: CONCLUSION AND RECOMMENDATIONS FOR VIETNAM 38 3.1 Conclusions 38 3.1.1 Major Drivers Of Banana Export In Vietnam 38 3.1.2 Room For Growth In Global Banana Market 39 3.2 Recommendations For Vietnam 40 INTRODUCTION Rationale of the research Over the past several years, Vietnam's exports have grown significantly, and the country is now a significant player in the global economy The abundance of natural resources, cheap labor costs, favorable trade policies, and strategic position of the nation all contribute to its export potential Vietnam is one of the main exporters of bananas in Southeast Asia, and the banana business there is expanding The Cavendish, Lady Finger, and Williams types of banana are the most often exported from Vietnam Vietnam shipped more than 130,000 tons of bananas in 2020, with over 70% of the exports going to China, according to data from the Vietnam Fruit and Vegetable Association South Korea, Taiwan, and Japan are a few additional top banana export markets for Vietnam Vietnam's ideal climate and location make it a prime candidate to become a significant exporter of bananas One of the most extensively grown fruits in Vietnam, the Mekong Delta is where the majority of the nation's bananas are produced Small-scale farmers who grow bananas in the Mekong Delta region, which is renowned for its lush soil and climate ideal for banana production, dominate the Vietnamese banana export sector Following harvest, the bananas are taken to packaging facilities to be graded, sorted, and packed for shipment According to a report by the International Labour Organization (ILO), in Vietnam, the banana industry is a significant source of employment for women, particularly in rural areas where they frequently work as seasonal laborers and young people who work on banana farms during school breaks Nevertheless, compared to other nations in the area, such as the Philippines and Thailand, Vietnam now exports an untold quantity of bananas Up till now, the Vietnamese government has designated banana export and cultivation as a priority sector However, to further exploit the opportunities, more studies should be conducted to gain a more profound understanding of which factors may degrade or facilitate Vietnam’s banana export Literature Review: Over the past 50 years, the gravity model has been extensively applied in the literature on international trade (Van Bergeijk et al., 2011) The model has been successfully used to examine a variety of flows, including migration, foreign direct investment, and particularly the flow of international trade This model, which estimates commerce based on the distance between nations and inter-country interactions, is based on Sir Isaac Newton's discovery of the law of gravity Tinbergen (1962) and Pöyhönen (1963) were the first authors to examine global trade flows using the gravity equation Since that time, the gravity model has gained popularity as a tool for empirical research of foreign commerce In 1962, Dutch economist Timbergen used the gravity model for the first time to examine international trade flows The trade flow between nation A and country B is the model's dependent variable, whereas GDP and distance are independent variables The final estimated results demonstrated that, in contrast to distance, the GDP variable has a positive impact on the flow of trade between two countries, indicating that greater proximity and higher economic sizes are associated with more trade Initially, there was very little theoretical support for the research being done in this area, but during the second half of the 1970s, a number of theoretical advancements have been made that support the gravity model Anderson (1979) was the first to theoretically validate the gravity model He made the first official attempt to derive the gravity equation from a model that assumed product differentiation by using expenditure systems where items are differentiated by origin (Armington preferences) and all transportation expenses are proxied by distance In the empirical economic literature, the gravity model has been applied in a number of empirical methods to explain international trade By employing panel data and a gravity equation, Ozdeser (2010) evaluated the parameters of the explanatory factors for "eurozone" countries These estimated parameters were then used to project Turkey's trade potential Elshehawy (2014) used the gravity model to research the factors affecting Egypt's exports, and the results showed that the main factors affecting Egypt's exports to its main trading partners are its GDP, the importer's GDP, the importer's population, regional trade agreements, and the border between Egypt and its trading partner Wang (2015) examined the GDP, distance, border, linguistic, and FTA membership elements that have an impact on China's export Koh (2013) investigated the factors that determine Brunei Darussalam's trade and also estimated its trade potential using panel data and stochastic frontier approaches El-Sayed (2012) looked at the economic impacts of trade between Egypt and other economic blocs, including the EU, the Common Market for Eastern and Southern Africa, and the ASEAN Free Trade Area According to Troy's (2014) analysis, the GDP, distance, official language, exchange rate, and background of global trade all have an impact on Cricum's trade Many scholars used the gravity model to look into the export of a certain good For example, Ebaidalla (2015) used the gravity model to describe how various factors affected Sudan's agricultural exports It was found that the agricultural exports of Sudan were influenced not only by GDP, population, distance, and exchange rates but also by government policy and whether or not the importing nations spoke Arabic The population, exchange rate, economy's openness, language, and producing region are the elements affecting export, according to Dlamini (2016), who studied Swaziland's sugar export Using the gravity model, Khiyavi (2013) came to the conclusion that the GDP, exchange rate, distance, and joining the trade organization are the primary factors affecting agricultural export of developing nations A variety of studies have been conducted in Vietnam using the gravity model to investigate the variables impacting export For instance, Dao (2013) examined the effects of various variables on the flow of goods imported and exported between Vietnam and Trans-Pacific Partnership (TPP) nations The study revealed the influence of variables like GDP, population, differences in wealth between nations, exchange rates, import/export tariffs between nations, and the degree of openness of TPP nations According to Tran et al (2017), the only factors influencing Vietnam's Document continues below Discover more from: kế toán quản trị ktqt112 Trường Đại học… 14 documents Go to course Sears marketing pp, xt kế toán quản trị None KHOẢNG TRỐNG Nghiên CỨU kế toán quản trị None Chap007 56 kế toán quản trị None Truyền thơng - kdqt 27 kế tốn quản trị None ĐỀ CŨ - jjjj kế toán quản trị None ĐỀ-CƯƠNG-KTCT 24 - No more kế toán quản rice export to ASEAN nations are the exporter's GDP, economic trị and development gap, None inflation, agricultural area, and population of the importing country Ngo (2016) examined the variables influencing Vietnamese agriculture export using the gravity model Aims and Objectives 3.1 Aims This report focuses on the analysis of the factors impacting Vietnam's export of bananas and demonstrates the bilateral trade flows between Vietnam and its major trade partners, including the United Kingdom, the United States, Russia, Canada, Australia, China, Japan, South Korea, Singapore, Malaysia, Cambodia, Kuwait, Saudi Arabia, based on their economic size and proximity using the gravity model 3.2 Objectives Factors Influencing Vietnam’s banana export Scope of the research in Vietnam and in partner nations Researching Vietnam's banana export in the period between 2013 and 2021 Research methods The gravity is deemed appropriate for analysis of the variables influencing Vietnamese banana export We use the variation of Krugman's (2005) gravity model While only two independent variables—GDP and distances—are included in the original model, this study takes into account the traded flow (export) of Vietnamese bananas as the dependent variable and involves additional factors such as population, inflation, distance, agricultural land area and the difference in exchange rates between Vietnam and its trade partners as explanatory variables to further strengthen the model Structure of the research CHAPTER I: OVERVIEW OF BANANA EXPORT IN VIETNAM 1.1 The Importance Of Export In Vietnam Economy Vietnam's economy has experienced remarkable growth and transformation over the past few decades, emerging as one of the fastest-growing economies in Southeast Asia A key driver of this economic success has been its robust export sector Exports play a crucial role in Vietnam's economy, contributing significantly to its overall GDP, job creation, and foreign exchange earnings The export sector in Vietnam has undergone a remarkable expansion, with a diverse range of goods and services being shipped to markets around the world While Vietnam exports various products, including textiles, electronics, and footwear, one particularly notable export commodity is bananas Bananas are a significant agricultural product in Vietnam, and the country has seen a steady increase in banana exports over the years The importance of exports in Vietnam's economy cannot be overstated Firstly, exports generate substantial revenue for the country, contributing to its overall economic growth By selling goods and services to international markets, Vietnam earns valuable foreign exchange, which helps to strengthen its financial stability and support its domestic currency This influx of foreign currency allows the country to finance imports, invest in infrastructure development, and stimulate further economic activities Secondly, the export sector plays a vital role in job creation As exports increase, industries and businesses involved in producing and distributing these goods experience growth, leading to the creation of employment opportunities for the Vietnamese population This job creation helps to reduce unemployment rates, alleviate poverty, and improve the living standards of individuals and families across the country Moreover, exporting enables Vietnam to access global markets and participate in the global supply chain By engaging with international markets, Vietnamese businesses can expand their customer base beyond domestic borders, reaching consumers worldwide This exposure to international markets fosters innovation, promotes competitiveness, and encourages the adoption of best practices in production and management It also provides opportunities for Vietnamese companies to collaborate with foreign partners, facilitating knowledge transfer and technology exchange Additionally, the export sector contributes to the development of related industries and sectors within Vietnam For example, increased banana exports create a demand for packaging materials, transportation services, and logistical support This, in turn, stimulates growth in these sectors, leading to further economic development and job creation In conclusion, exports are of paramount importance to Vietnam's economy They generate substantial revenue, support job creation, facilitate access to global markets, and contribute to the overall economic growth and development of the country The export of bananas, along with other goods and services, plays a significant role in shaping Vietnam's economy and positioning the country as an active participant in the global trade landscape 1.2 Overview of the Banana Industry in Vietnam The banana export industry in Vietnam has experienced significant growth and has become a prominent player in the global banana trade Vietnam's favorable climate and fertile soil provide suitable conditions for banana cultivation, enabling the country to produce high-quality bananas for export 1.2.1 Production and Varieties: The Mekong Delta area of Vietnam, which is renowned for its good climatic conditions and abundant soil, is where banana agriculture is predominantly focused