report topic the international trade performance of vietnam and the international investment performances of vietnam in 2010 2021

Executive Summary This report examines Vietnam's export structure and comparative advantages and the determinants of the country's success in attracting foreign direct investment FDI..

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Report

Topic: The international trade performance of Vietnam and The _ international investment performances of Vietnam in 2010-2021

Group 6 Class: [B2019G

Subject: INS2028 Teacher: Dr Tran Thi Mai Thanh

Hanoi, 13/05/2021

TABLE OF CONTENT

I The 2010 and 2021 Vietnam’s RCA & the movement on comparative advantages of

Vietnamese exports in 2010-2021

1 Background and Overview of Vietnam's Commodity Exports 4

2 Calculation of RCA in 2010 and 2021

II The five characteristics of Vietnam most contribute the to the country's FDI

attraction achievement

1 Large and educated workforce/Young and growing population

2 Stable political environment = Attractive business

environment 9

3 Strategic location

5 Economic Reform / Favorable Economic Policy

Executive Summary

This report examines Vietnam's export structure and comparative advantages and the

determinants of the country's success in attracting foreign direct investment (FDI) In the first section, we analyze the merchandise exports of Vietnam in 2010 and 2021 to calculate the RCA index and to analyze the movement on comparative advantages We conclude that Vietnam has seen significant growth in its exports, particularly in the commodity sector, while the RCA index has also increased This suggests that Vietnam has strengthened its comparative advantages in

these areas In the second section, we identify and discuss five characteristics of Vietnam that

contribute to the country's success in attracting FDI These include a large and educated workforce, an attractive business environment, strategic location, government support, and favorable economic policies

Introduction

Vietnam has become one of the most promising emerging economies in the world The country

maintains a vibrant export-oriented market, which has shown immense growth in recent years,

contributing significantly to its economic development Additionally, Vietnam has also been successful in attracting substantial FDI inflows The focus of this report is to analyze these two aspects of Vietnam's economic development and identify the reasons for the country's success The report's scope includes the analysis of merchandise exports, focusing on the comparative advantages of the country to provide insight into changes in export structure We will then discuss the determinants of Vietnam's success in attracting FDI, including the country's economic policies, labor market, business environment, and government support The report's primary objective is to provide an understanding of the changing economic landscape of Vietnam and the country's potentials for economic growth

| The 2010 and 2021 Vietnam's RCA & the movement on comparative advantages of Vietnamese exports in 2010-

2021

1 Background and Overview of Vietnam's Commodity Exports

Vietnam is a leading exporter of various goods and products globally, and its economy is highly

dependent on commodity exports, which mainly include textiles, footwear, electronics and

commodities such as coffee and rice The country's exports have grown strongly over the past decade, with an increase of 240% from 2010 ($96.9 billion) to 2021 ($330.1 billion), and despite the impact of Due to the impact of the COVID-19 pandemic on the global economy, Vietnam's exports will still increase by 21.4% in 2020 and goods exports will reach a record high in 2021

2 Calculation of RCA in 2010 and 2021

To analyze trends in comparative advantage over the past decade, I looked at Vietnam's merchandise export data for 2010 and 2021 and assessed through a country's comparative advantage in trade as just Revealed Comparative Advantage (RCA) number, which measures the relative advantage of a country's exports in particular product categories over the rest of the world and is a widely used metric widely used to determine a country's advantage in exporting a particular product RCA values above | indicate a country has a comparative advantage in that industry, while values below 1 indicate a comparative disadvantage

The RCA for different industries can be calculated by comparing the value of Vietnam's exports with its total exports and its share in world trade, namely by applying the formula the following:

(Export market share of commodity i of country c/Total export volume of country c)(Market

share of export of commodity i in the world/Total global export volume) So, the formula for calculating Vietnam's RCA index in 2010 and 2021 will be:

In there:

x: Export market share

X: Total export volume

1: Goods for export

v: Vietnam

w: All countries in the world

Therefore, we obtain the RCA index values of all export products of Vietnam in 2010 and 2021

as follows:

0ỊTOTAL [All products

No.| Code Product 2010 2021

and other textile floor

Knitted or crocheted fabrics

Ceramic

Iron and steel

of iron or steel

and articles thereof

Nickel and articles thereof

and articles thereof

Lead and articles thereof

and articles thereof

accessories thereof

manufactured articles

3 Analysis of Comparative Advantage

RCA 2010

64.35%

@ Advantage

mw No advantage

RCA 2021

@ No advantage

Through the two graphs above, we can see that in 2010, Vietnam's RCA ratio > 1 was 34.02%, indicating that the country has a moderate comparative advantage in exporting goods In contrast,

by 2021, this ratio will decrease by 4.12%, however, look at the chart below:

Variation of RCA

Miscellaneous manufactured articles the

r

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lms

| Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television I=

=

Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad bax

1

Ceramic products te

_

Footwear, gaiters and the like; parts of such articles

=

Articles of apparel and clothing accessories, not knitted or crocheted Imma

mm

Knitted or crocheted fabrics mr=

=

Carpets and other textile floor coverings =

"

Man-made staple fibres lites

=

Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn bs

tk ===

Wood and articles of wood; wood charcoal im

Ln]

Raw hides and skins (other than furskins) and leather mm

a

Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial m

_

Tobacco and manufactured tobacco substitutes tn

r

Preparations of cereals, flour, starch or milk; pastrycooks products ma Vegetable plaiting materials; vegetable products not elsewhere specified or included mu

en]

Cereals lites

Edible fruit and nuts; peel of citrus fruit or melons mm

k

Fish and crustaceans, molluscs and other aquatic invertebrates 8——————

We can realize that in 2010, Vietnam's exports were concentrated in a number of industries such

as seafood, coffee, cereals, handmade knitwear, textiles, footwear, etc at this time, Vietnam's

RCA is relatively high in labor-intensive industries, which reflects the country's comparative advantage in low-cost labor However, in contrast to the advantages in the above mentioned sectors, Vietnam faced a comparative disadvantage in industries such as electronics and

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machinery in 2010 Despite facing many difficulties, by 2021, electronics have become a

significant contributor to the country's exports, with mobile phones and electronic components accounting for more than 20% of total exports—a marked improvement over a decade before

When we compare the RCA values of 2010 and 2021, we can notice some important changes in the export structure and comparative advantage of Vietnam during this period More specifically,

in the period 2010-2021, Vietnam's export structure shifts towards a more diversified, higher value-added, these changes in export structure reflect the growing comparative advantage growth

in Vietnam as the country moves from labor-intensive industries to more technologically

advanced industries This is a sign that Vietnam has found and successfully implemented a transformation plan to consolidate its comparative advantage methodically and gradually transform itself into a significant commodity exporter

Il The five characteristics of Vietnam most contribute the

to the country's FDI attraction achievement

Foreign Direct Investment (FDI) plays an important role in Vietnam's economic development FDI has helped the country develop infrastructure, expand its export sector and create job opportunities Vietnam has succeeded in attracting FDI, and it is not natural for the S-shaped

country to achieve this feat There are many reasons for Vietnam's success, but due to the limited

capacity, in this report, I will only highlight five characteristics that I consider the most important contributing to Vietnam's FDI attraction

1 Large and educated workforce/Young and growing population

With a population of about 97 million people, the country has a young and growing population, with more than 60% under the age of 35, which is a significant source of labor for foreign investors In addition to the large and dynamic population, another attractive point for investors is that in contrast to the large labor force, the cost of Vietnamese labor is relatively low compared to other countries in the region, which is an advantage It is impossible not to mention that of Vietnam

2 Stable political environment = Attractive business environment Vietnam has a stable political environment, which means a relatively stable business environment with a strict legal system and government regulations that facilitate business activities for the government to implement economic reforms and attract FDI The country has a low corporate tax rate, making it a competitive destination for foreign investors

3 Strategic location

Vietnam has a strategic location in Southeast Asia, making it easy to access other markets, which

is why Vietnam has become an attractive destination for foreign investors looking to expand in the region Moreover, the country has a long coastline and has access to several seaports,

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making it easier to access the global market, in addition to relying on its available natural advantages, Vietnam also invests in Significantly on improving infrastructure, including ports, roads, railways and airports, making transportation faster and more convenient, all of which have made it one of the best places to visit ideal location for foreign investment enterprises

4 Government Support

The Vietnamese government has implemented a number of policies to encourage foreign investment, including tax incentives, import and export exemptions, and improved regulatory framework In addition, the government actively engages with foreign investors, providing support and help in navigating the country's business environment

5 Economic Reform / Favorable Economic Policy

Vietnam's economic reform programs have succeeded in creating a market-oriented economy As stated above, the Government has implemented policies to promote international trade, reduce barriers to entry and improve the business environment These policies have succeeded in creating a favorable investment climate, including the removal of trade barriers, deeper integration into global markets, and improved infrastructure In addition, Vietnam has signed a number of international trade agreements, including ASEAN-FTA, helping to attract more FDL

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Conclusion

This report has analyzed Vietnam's success in export growth, focusing on merchandise exports, to gauge the country's comparative advantages in the global market The analysis reveals that Vietnam has strengthened its comparative advantages in the electronics and machinery sector while also experiencing significant growth in the commodities sector On the other hand, this report has also identified five essential determinants of Vietnam's success in attracting FDI, including a large and educated workforce, an attractive business environment, strategic location, government support, and favorable economic policies Vietnam's advantageous business environment, coupled with the government's support, has created a conducive investment climate that has successfully attracted significant FDI inflows

II

REFERENCES

Data

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%7cTO TAL%7c3%07c%7c2967c1%67c 1%067e2%7c2327e12%7c1%67c1967e367el

https://data.worldbank.org/

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