Relationship between sectoral exports and economic growth A time series analysis for Vietnamese fishery sector 1997-2008

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM- THE NETHERLANDS PROJECT FOR M.A ON DEVELOPMENT ECONOMICS RELATIONSHIP BETWEEN SECTORAL EXPORTS AND ECONOMIC GROWTHA TIME SERIES ANALYSIS FOR VIETNAMESE FISHERY SECTOR 1997 - 2008 BQ GIAO DVC £JAO TAO TRlJONG HQC KINH r{rP.HCM THU VIEN l13 By NGUYEN ANH TRAM SUPERVISOR: DR NGUYEN MINH DUC MASTER OF ARTS IN ECONOMICS OF DEVELOPMENT HO CHI MINH CITY, DECEMBER 2009 CERTIFICATION "I certify that the substance of this thesis has not already been submitted for any degree and has not been currently submitted for any other degree I certify that the best of my knowledge and help received in preparing this thesis and all sources used have been acknowledged in this thesis." NGUYEN ANH TRAM Date: 16/12/2009 ii ACKNOWLEDGMENTS No man is an island, entire of itself- John Donne The work of this thesis represents the concerted efforts of many individuals One of the features is collaboration and certainly it required many acts of collaboration by quite a few people in order to come to fruition Firstly, I am heartily thankful to my supervisor, Dr Nguyen Minh Due, whose encouragement, supervision, and support from the preliminary to the concluding level enabled me to develop an understanding ofthe subject Secondly, I would like to thank Prof Karen Jansen, Dr Nguyen Trong Hoai, and Dr Tran Tien Khai for serving on my thesis committee, valuable suggestions, invaluable encouragement, insightful comments, and hard questions I thank my friends, thirdly, for the stimulating discussions, and for all the help and fun we have had during the master course Besides, I also give many thanks to all project teachers and staffs in Ho Chi Minh City Further, I would like to express my sincere gratitude to my parents for patiently putting up with a daughter who could never get enough of school Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project 111 ABSTRACT Numerous studies in literature have tried to test the relationship between exports, especially sectoral exports, and economic growth This paper examines the relationship with evidence from fisheries exports of Vietnam during 1997 to 2008 The contribution of fishery sector in Vietnamese Gross Domestic Products (GDP) may be mathematically calculated with statistical figures However, the effects of fishery exports on the economic growth are yet to be thoroughly studied in an econometric approach Descriptive and time series analyses in this thesis present positive effect of fishery exports on the Vietnamese economic growth in long run The modern econometric approach with stationary and co-integration tests and vector error correction models used in this study also allows forecasting a persistence of the effects of fishery exports on Vietnamese GDP despite of different seasonal phase business For the long run estimation, a double increase in its fishery exports value would raise the GDP by 7%; This has a great economic meaning in developing process of the economy In reverse side, Vietnamese fishery exports would increase by 5.2% with 10% increase in its GDP Confirming the· role of fishery exports in economic growth, it is necessary for the sector to improve its competitive capacity Firstly, it should continue to obey international standards, keep negotiating to get benefits from existing regulations, improve domestic institutional management to attract more foreign investment Particularly, the stakeholders of Vietnamese fishery exports should concern some main problems such as product's quality, marketing strategy, production cost, trade barrier and tariff as well IV ACRONYMS AND INITIALS ADF Augmented Dickey-Fuller APEC Asia-Pacific Economic Corporation APFIC Asia-Pacific Fishery Commission BTA Bilateral Trade Agreement CPI Consumer Price Index EU European Union FAO Food and Agriculture Organization FISTENET Fisheries Scientific Technological Economic Information GDP Gross Domestic Product GNP Gross National Product GSO General Statistical Office ICT Information & Communication Technology OLS Ordinary Least Squares SBV States Bank of Vietnam USD The United States Dollars VECM Vector Error Correction Modeling WTO World Trade Organization v TABLE OF CONTENTS LIST OF TABLES vii LIST OF FIGURES viii Chapter INTRODUCTION ····················································o••····························· 1.1 PROBLEM STATEMENT • • • 1.2 SCOPE OF THE STUDY 1.3 RESEARCH OBJECTIVES 1.4 RESEARCH QUESTIONS • •.•.• • .• • 1.5 RESEARCH HYPOTHESIS 1.6 METHODOLOGY AND DATA COLLECTION 1.7 THE STRUCTURE OF THE THESIS Chapter LITERATURE REVIEW 2.1 THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND TRADE 2.2 THEORETICAL AND EMPIRICAL BACKGROUNDS OF SECTORAL EXPORTS 2.3 WHY FISHERY SECTOR WAS CHOSEN FOR THIS STUDY? 11 2.4 AN OVERVIEW OF VIETNAM FISHERY SECTOR 15 2.5 BILATERAL TRADE AGREEMENT, THE UNITED STATES ANTI-DUMPING MEASURES AND VIETNAM FISHERY EXPORTS IN THE PERIOD 1997- 2008 18 2.6 THE EXCHANGE RATE REGIME AND VIETNAM FISHERY EXPORTS 1997-2008 19 2.7 CPI (CONSUMER PRICE INDEX) AND VIETNAM FISHERY EXPORTS 1997- 2008 20 2.8 DEFINITIONS •.•.• ; .•.• •.• •.•.•.• • • • 21 2.8.1 Fishery production : 21 2.8.2 Export 21 2.8.3 Export growth 21 2.8.4 Economic Growth 21 2.8.5 Consumer Price Index- CPI 22 2.8.6 Antidumping measurement 23 Bilateral Trade Agreement (BTA) 24 2.9 EMPIRICAL ESTIMATION RELATED TO EFFECTS OF FISHERY EXPORTS ON ECONOMIC GROWTH 26 2.9.1 Dependent variable 26 2.9.2 Independent variables 26 2.9.2.1 Fishery Exports 26 2.9.2.2 Labor 27 2.9.2.3 Exchange rate 27 2.9.2.4 Consumer Price Index 28 Chapter METHODOLOGY 29 3.1 MODEL SPECIFICATIONS • • • • •.•.• • .• •.• •.• •.•• • 29 3.2 DATA DESCRIPTION ; 31 3.3 DATA FOR VARIABLES 31 3.4 DUMMY VARIABLES 32 Chapter RESULTS AND DISCUSSION 33 4.1 DESCRIPTIVE ANALYSIS • •.••.• , • • • 33 4.2 ECONOMETRIC ANALYSIS • •.• .• •.• • .••.•.•• 37 4.2.1 Stationary testing of real variables 37 4.2.1.1 Unit root tests for log(YGNP) : 37 4.2.1.2 Unit root tests for log (REXR) .38 4.2.1.3 Unit root test for log (XGNP) 39 4.2.2 Two stage least square regression 39 Chapter CONCLUSIONS AND SUGGESTIONS 47 REFERENCES 49 Vl LIST OF TABLES Table 1.1 Total Imports And Exports Of Vietnam In U.S Dollars Table 2.1 Estimate Of Overseas Filipino Workers (December 2004) •••••••• •.•••••• Table 2.2 Vietnam Exports Of Tra And Basa Fish (Tons) 24 Table 4.1 Descriptive Statistical Spreadsheet Of All Variables 36 Table 4.2 Covariance Matrix Spreadsheet Of All Variables 36 Table 4.3 Correlation Matrix Spreadsheet Of All Variables 36 TABLE 4.4A DF-GLS UNIT ROOT TEST FOR LOG (YGNP) 38 TABLE 4.4B ADF UNIT ROOT TEST FOR LOG (YGNP) 38 TABLE4.5ADF-GLS UNITROOTTESTFORLOG(REXR) 38 TABLE 4.5B ADF UNIT ROOT TEST ON LOG (REXR) 38 TABLE 4.6A DF-GLS UNIT ROOT TEST FOR LOG (XGNP) ;·; 39 TABLE 4.6B ADF UNIT ROOT TEST FOR LOG (XGNP) 39 Table OLS of Log(YGNP) 40 Table 4.8 The Regression Result For Equation In The Second Stage ••••••••••••••• 41 Table 4.9 First Difference Regression For Log(YGNP) •••••••••••••••••••••••••••••••••••••••••• 42 Table 4.10 First Difference Regression For Log(XGNP) 42 Table 4.11 Johansen Cointegration Test Summary 43 Table 4.12 Vector Error Correction Estimates •••••••••••••••••••••••••••••••••••••••••••••••••••••• 44 Vll LIST OF FIGURES Figure 2.1 Reported Aquaculture Production In China (From 1950) •••••••.•.•••••••• 10 Figure 2.2 Vietnam's Oil Production And Consumption, 1998- 2008* • ••••.•••••• 11 Figure 2.3 Top Asia - Pacific Oil Producers, 2006* 12 Figure 2.4 Vietnam's Primary Fishery Export Products In 2006 (Value Basis) 14 Figure 2.5 Vietnam's Fishery Products Export Market, 2006 (Value Basis) ••••••• 17 Figure 2.6 Time Line Of Standard US Antidumping Investigation ••••••••••••••••••••• 23 Figure Monthly Exports Of Frozen Fish Fillets To The US, ••• • •.•••••• • ••••• 24 Figure 2.8 Values (US$ Millions), Rates Of Growth (Percentages), And Shares In Total Exports (Percentages) Of Vietnam's Exports To The U.S, 2000-2006 • 25 Figure 4.1 GDP In Vietnam, 1997 - 2008 (Quarterly) 33 Figure 4.2 Fishery Exports In Vietnam, 1997 - 2008 (Quarterly) 34 Figure 4.3 Exchange Rate VND/USD, 1997 - 2008 (Quarterly) •••••••••••••••.•.•••••••••• 34 Figure 4.4 Vietnam Consumer Price Index, 1997 - 2008 (Quarterly) •••••••••••••••••• 35 Figure 4.5 Us Consumer Price Index, 1997- 2008 (Quarterly) 35 viii Chapter INTRODUCTION 1.1 Problem statement World trade has been expanded more and more, with global exports growing from $84 billion USD in 1953 to $6,272 billion USD in 2002 (HM Treasury, 2004) The figures demonstrate an increasing economical interdependence in the world nowadays relative to fifty years ago However, the most prominent role in the increase is of developing countries and emerging markets; exports from developing countries as a whole accounted for 29 percent of world trade in 2001 Economic theory and empirical evidence also showed that economies with trade more tend to grow faster Therefore, the fact that international trade or exports are always promoted by the Vietnam government is not an exception Prior to the collapse of the Soviet Union, most of Vietnam's trade was with the former Soviet Union and Eastern European countries Since 1991, the country's trade has diversified significantly It has also expanded dramatically, reflecting a globalization process of the Vietnamese economy In 1999, its openness (exports plus imports divided by GDP) reached the level of 84.5 percent and now (2009) about 170 percent, a useful indicator for an increasing global integration of a country Table 1.1 Total imports and exports of Vietnam in U.S dollars Trade (expressed in millions of US$) : Vietnam Exports Imports 1994 4,054 5,825 1995 5,448 8,155 1996 7,255 11,144 1997 9,184 11,592 1998 9,360 11,494 Source: United Nations Monthly Bulletin of Statistics (September, 2000) Although Vietnam has consistently had trade deficits, the amount has narrowed with the boom in Vietnamese exports For example, in 1989 exports were only 73.7 percent of imports In 1999, exports had risen to be 98.9 percent of imports In the period from 1997 to 2007, Vietnamese economy is prosperous in the context of global integration; especially Vietnam joined APEC at the end of 1998 and signed the bilateral trade agreement with the United States in 2001 Since the milestones, Vietnam's exports has continuously grown, leading to a remarkable increase in its international trade and openness However, the global economy began to have the indicators of a crisis from the early months of 2008 It was caused by regression of the real estate market in America, and created a serious financial crisis in the United States The crisis spread out over the world, from Europe, Latin America, Middle East, Russia, to Asia and Vietnam as well Although Vietnam has been affected by the crisis later than the others, it stills has faced some problems because of its wide economic openness An obvious effect of the global crisis is speedy decline of the world's import demand That means Vietnam's exports in coming years will be suffer because Vietnam's economy is likely to follow an export-oriented growth In Vietnam's export structure, although crude oil still stand on the first position in export revenues, labor intensive products such as agricultural and fishery products are very important exported products of the country In these products, fisheries are prominent because fish resources represent natural capital and are a potential source of sustainable wealth for Vietnam This wealth provides the opportunity for such resources to make an ongoing contribution to economic growth, poverty alleviation and people livelihoods as well (Due, 2008a, 2009a) Fishery exports also make significant contributions to the national economy through the generation of foreign exchange derived from international trade Exports of fishery products have grown rapidly during last ten years In fact, the aquatic products once contributed approximate 10% of whole national export revenues (Due, 2009a) Otherwise, income multiplier effects can potentially "trickle up" to the national economy ensuring that fisheries can support national economic growth through contributions to GDP Although the Vietnamese fishery sector contributes to national GDP typically varied by 2.5-4.0 percent, it also generates a wide range of tax revenues, contributing to the national budget Moreover, the major share of fishery exports have strong backward linkages with the other sectors both in terms of primary and value added commodities Unfortunately, with high fluctuation of prices and the 2008 global crisis, global demand for fishery products may decline, and in its tum fishery exports may affect Vietnamese GDP growth rate because the country relies much upon exports for economic growth estimated results Thus, a two-stage least squares (2SLS) method is employed to estimate coefficients in the above equations Firstly, an OLS estimation for Equation 10 is conducted The result is presented in Table 4.7 Table OLS of log(YGNP) Dependent Variable: LOG(YGNP) Method: Least Squares Sample: 1997:1 2008:4 Included observations: 48 Variable c Coefficient LOG(REXR) LOG(XGNP) BTAD ADD QD2 QD3 QD4 4.490880 -0.185155 0.203035 -0.013674 0.117630 0.230970 0.121037 0.285728 R-squared Adjusted R-squared S.E ofi'egression Sum squared resid Log likelihood Durbin-Watson stat 0.943417 0.933515 0.053719 0.115429 76.61807 0.673965 Std Error t-Statistic Prob 1.554282 0.164092 0.037764 0.031418 0.026146 0.025114 0.028607 0.028010 2.889361 -1.128361 5.376469 -0.435249 4.498962 9.196952 4.231006 10.20097 0.0062 0.2659 0.0000 0.6657 0.0001 0.0000 0.0001 0.0000 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F-statistic Prob(F -statistic) 9.010557 0.208338 -2.859086 -2.547219 95.27591 0.000000 After run the first-stage regression and get the estimated residuals, the estimated value of YGNP, YGNPhat, is used in the second-stage estimation for the Equation (Table 4.8) 40 Table 4.8 The regression result for Equation in the second stage Dependent Variable: LOG(XGNP) Method: Least Squares Sample: 1997:1 2008:4 Included observations: 48 Variable c -2.009333 0.408959 2.066446 0.352853 -0.035066 -0.289265 0.031216 -0.329869 0.900740 0.883369 0.171357 1.174532 20.93889 1.063037 LOG(REXR) LOG(YGNPHAT) BTAD ADD QD2 QD3 QD4 R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood Durbin-Watson stat t-Statistic Prob -0.369247 5.441702 0.774905 0.527754 5.377152 0.384301 4.223859 0.083538 0.102205 -0.343089 -2.162100 0.133789 0.284605 0.109683 -2.044365 0.161355 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F-statistic Prob{F -statistic2 Coefficient 0.7139 0.4430 0.0000 0.0001 0.7333 0.0366 0.7774 0.0475 12.98224 0.501760 -0.539120 -0.227254 51.85455 0.000000 Std Error Effects of the economic growth and fishery exports are significant and economically meaningful However, the Durbin-Watson values of the estimated equations are 0.67 and 1.06, indicating a possible serial correlation problem in both equations For the Durbin-Watson is less than 1.0 (0.67), this is an alarm for successive error terms, on average, close in value to one another For the DurbinWatson is less than (1.06), there would be an evidence for positive serial correlation Therefore, another econometric method is employed for more concise estimation The alternative is first difference regression method The first difference equations used for estimation are described as follows: dlog(YGNP) = a + a1dlog(REXR) + a2dlog(XGNP) + a3 BTAD + a4 ADD + a5 QD2+ a6QD3+ a7QD4 dlog(XGNP) = a'o + a'1dlog(REXR) + a'2dlog(YGNP) + a'3BTAD + a'4ADD + a'5 QD2+ a'6QD3+ a'7QD4 41 Table 4.9 First difference regression for log(YGNP) Dependent Variable: DLOG(YGNP) Method: Least Squares Sample(adjusted): 1997:2 2008:4 Included observations: 47 after adjusting endpoints Variable Coefficient Std Error t-Statistic Prob c -0.346992 0.047700 0.003831 0.005777 0.001690 0.638230 0.266059 0.503245 0.011683 0.118016 0.023826 0.010663 0.009871 0.018648 0.015590 0.012591 -29.70106 0.404180 0.160771 0.541757 0.171162 34.22448 17.06568 39.96791 0.0000 0.6883 0.8731 0.5911 0.8650 0.0000 0.0000 0.0000 DLOG(REXR) DLOG(XGNP) BTAD ADD QD2 QD3 QD4 R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood Durbin-Watson stat 0.991715 0.990228 0.024120 0.022689 112.7564 1.992224 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F -statistic Prob(F -statistic) 0.017083 0.243995 -4.457719 -4.142800 666.8921 0.000000 Table 4.10 First difference regression for log(XGNP) Dependent Variable: DLOG(XGNP) Method: Least Squares Sample(adjusted): 1997:2 2008:4 Included observations: 47 after adjusting endpoints Variable Coefficient Std Error t-Statistic Prob c ,.0.245987 0.136645 0.172906 -0.044219 0.003289 0.546563 0.448400 0.211754 0.379429 0.794256 1.075475 0.071561 0.066341 0.692456 0.296220 0.546925 -0.648307 0.172041 0.160771 -0.617925 0.049583 0.789310 1.513740 0.387171 0.5206 0.8643 0.8731 0.5402 0.9607 0.4347 0.1382 0.7007 DLOG(REXR) DLOG(YGNP) BTAD ADD QD2 QD3 QD4 R-squared Adjusted R-squared S.E ofregression Sum squared resid Log likelihood Durbin-Watson stat Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F -statistic Prob(F -statistic) 0.730289 0.681880 0.162051 1.024163 23.22728 3.020624 0.035983 0.287314 -0.647969 -0.333051 15.08562 0.000000 The first difference regression results show that effects of economic growth and fishery exports are not statistically significant and Durbin-Watson statistic in Table 4.10 is 3.02, indicating a possible negative correlation 42 Because the first difference regressiOn have just to capture the short-run but insignificant relationships, the datasets of log(YGNP) and log(XGNP) are suspected to be cointegrated The cointegration test thus needs to be conducted to employ the error correction method for the datasets With the support ofEview software, the Johansen cointegration test is used to get the results expressed in Table 4.11 Table 4.11 Johansen Cointegration Test Summary Sample(adjusted): 1997:3 2008:4 Included observations: 46 after adjusting endpoints Trend assumption: Linear deterministic trend Series: LOG(YGNP) LOG(XGNP) Lags interval (in first differences): to Unrestricted Cointegration Rank Test Trace Hypothesized No ofCE(s) Eigenvalue Statistic None 9.496207 0.110896 0.085061 4.089317 At most * Percent Critical Value 15.41 3.76 Percent Critical Value 20.04 6.65 Trace test in the Table 4.11 indicates a cointegration between the two datasets of log(YGNP) and log(XGNP) The cointegration allows use Error Correction Modelling method to reconcile the short-run behavior of these variables with their long-run behavior With a possible endogeneity between log(YGNP) and log(XGNP) datasets, Vector Error Correction estimation is conducted The estimation results are presented in Table 4.12 Table 4.12 proves that fishery exports affect much on GDP (absolute value oft-stat is 3.386) but the sign of this relationship is minus Values of both GDP and fishery exports in all three quarters 2, and increase ·relative to that in quarter because annual quarter is the holiday season of Vietnamese people Most of the people try to relax and get fun after one working hard year, then the productivity in Vietnamese economy reduces, making a reduction in GDP values Further, in the first quarter of each year, most of Vietnamese fishery outputs are prioritized to serve domestic market, thus, there is not much surplus in fishery production to export Values of fishery exports in second quarters are higher than that in first quarters because all production activities in Vietnam start in normal operation after holiday The figures are improved well in third and fourth quarters in efforts to achieve annual export targets of fisheries enterprises 43 Table 4.12 Vector Error Correction Estimates Included observations: 46 after adjusting Standard errors in ( ) & t-statistics in [ ] Cointegrating Eq: LOG(YGNP(-1)) LOG(XGNP(-1)) c CointEq1 1.000000 -0.353490 (0.10166) -3.47723 Error Correction: D(LOG(YGNP)) D(LOG(XGNP)) CointEq1 -0.186955 (0.07227) [-2.58688] 0.152659 (0.15317) [ 0.99666] -0.084653 (0.02500) [-3.38643] -0.918004 (0.65538) [-1.40072] -0.063581 (0.07241) [-0.87808] -0.017598 (0.01286) [-1.36845] 0.011578 (0.01000) [ 1.15793] 0.649421 (0.07314) [ 8.87885] 0.268454 (0.02355) [ 11.3991] 0.521871 (0.03528) [ 14.7913] 0.524847 (0.46139) [ 1.13754] 0.731477 (0.97786) [ 0.74804] -0.443494 (0.15959) [-2.77897] 1.353921 (4.18404) [ 0.32359] 0.205208 (0.46227) [ 0.44391] 0.003412 (0.08210) [ 0.04156] -0.032475 (0.06384) [-0.50871] 0.996612 (0.46695) [ 2.13429] 0.564955 (0.15035) [ 3.75762] 0.641232 (0.22525) [ 2.84679] 0.993699 0.992124 0.016793 0.021598 630.8244 116.7833 -4.642753 -4.245222 0.011259 0.243366 0.812120 0.765150 0.684454 0.137886 17.29021 31.50765 -0.935115 -0.537584 0.027537 0.284529 D(LOG(YGNP(-1))) D(LOG(XGNP(-1))) Constant LOG(REXR) BTAD ADD QD2 QD3 QD4 R-squared Adj R-squared Sum sq S.E equation F -statistic Log likelihood AkaikeAIC Schwarz SC Mean dependent S.D dependent Determinant Residual Covariance Log Likelihood Log Likelihood (d f adjusted) Akaike Information Criteria Schwarz Criteria 8.71E-06 148.7185 137.4429 -5.019257 -4.144689 44 Real exchange rate and the bilateral trade agreement between Vietnam and the US seem to increase Vietnamese GDP and fishery exports but these effects are not statistically significant Similarly, the 2003 US anti-dumping measurements against to catfish, and then shrimp imports from Vietnam seem to depress Vietnamese fishery exports but the effects has not enough significance to derive an economic implication With the Vector Error Correction estimation, the empirical for log(YGNP) are derived as following D(LOG(YGNP)) = - 0.19*( LOG(YGNP(-1))- 0.35*LOG(XGNP(-1))- 4.42) + 0.15*D(LOG(YGNP(-1)))- 0.08*D(LOG(XGNP(-1)))- 0.92 + 0.65*QD2 + 0.27*QD3 + 0.52*QD4 (9) Expanding the difference, the above equation becomes LOG(YGNP) -LOG(YGNP(-1)) + 0.19*( LOG(YGNP(-1))- 0.15*LOG(YGNP(-1)) + 0.15*LOG(YGNP(-2)) = 0.07*LOG(XGNP(-1)) + 0.84- 0.08*LOG(XGNP(-1)) + 0.08*LOG(XGNP(-2))- 0.92 + 0.65*QD2 + 0.27*QD3 + 0.52*QD4 Or LOG(YGNP)- 0.96*LOG(YGNP(-1)) + 0.15*LOG(YGNP(-2)) =0.01 *LOG(XGNP(-1)) + 0.08*LOG(XGNP(-2))- 0.08 + 0.65*QD2 + 0.27*QD3 + 0.52*QD4 Lastly, the long run equation of the Equation 10 is estimated as follow: LOG(YGNP) = 0.96*LOG(YGNP(-1))- 0.15*LOG(YGNP(-2))- 0.01*LOG(XGNP(1)) + 0.08*LOG(XGNP(-2))- 0.08 + 0.65*QD2 + 0.27*QD3 + 0.52*QD4 (10) Result of Equation 10 proves that GDP of Vietnam increases in all three quarters 2, 3, and relative to that of the first quarter Although fishery exports depress Vietnamese GDP in its first lag, it is estimated to increase the GDP in its second lag with larger effect In long run, with summation of the two lags, fishery exports are likely to increase the GDP For the long run estimation, a conclusion can be pointed out that Vietnamese GDP will increase 0.7% with 10% increase in its fishery exports This has a great economic meaning in developing process of the economy For example, if value of fishery exports doubles, Vietnamese GDP would increase by 7%, it is so meaningful The estimation results also confirm the role of sectoral exports in national economic growth, consistent with previous findings by Awokuse (2003), Anh (2008), and Thompson (2009) In further implication, the results have also confirmed the contribution of exports to economic growth as documented in lots of literature Vohra (2001), for instance, finds exports 45 have a positive impact on economic growth when a country achieves some level of development, examining India, Pakistan, the Philippines, Malaysia, and Thailand from 1973 to 1993 In another study, Lee and Pan (2000) provide evidence of Granger causal relations from exports to GDP in Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand In similar derivation, the empirical estimation for log(XGNP) (Equation 8) is expressed as follows: D(LOG(XGNP)) = 0.52*( LOG(YGNP(-1))- 0.35*LOG(XGNP(-1))- 4.42) + 73*D(LOG(YGNP(-1)))- 0.44*D(LOG(XGNP(-1))) + 1.35 + 0.99*QD2 + 0.56*QD3 + 0.64*QD4 (11) The above equations are expanded and calculated as below: LOG(XGNP) -LOG(XGNP(-1)) = 0.52*LOG(YGNP(-1))- 0.18*LOG(XGNP(-1))2.3 + 73*LOG(YGNP(-1)- 73*LOG(YGNP(.:2))- 0.44*LOG(XGNP(-1)) + 0.44*LOG(XGNP(-2)) + 1.35 + 0.99*QD2 + 0.56*QD3 + 0.64*QD4 Then, the last result of Equation 11 is: LOG(XGNP) = 0.38*LOG(XGNP(-1)) + 0.44*LOG(XGNP(-2)) + 1.25*LOG(YGNP(-1))- 73*LOG(YGNP(-2)) + 1.35 + 0.99*QD2 + 0.56*QD3 + 0.64*QD4 (12) The long run estimation derived in Equation 12 confirms an increase in fishery exports of Vietnam in all three quarters 2, 3, and relative to the first quarter Vietnamese GDP is likely to raise fishery exports in the first lag Although fishery exports are estimated to be lowered by GDP in second lag, with summation of the two lags, the GDP are likely to increase the fishery exports in long run Vietnamese fishery exports would increase by 5.2% with 10% increase in its GDP The estimated result is likely to be consistence with the findings of Siddique and Selvanathan (2002) mentioning about a positive effect of an economic growth on exports in Thailand during 1953-1993 through cointegration and Granger causality tests for exports, imports, and economic growth 46 Chapter CONCLUSIONS AND SUGGESTIONS As an attempt at studying the contribution of the fishery exports to economic growth, this thesis used particularly time series data 1997:1 - 2008:4 in Vietnam to examine the relationship between them Specifically, this paper analyzed the response of fishery exports to economic growth together with the effects of exchange rate, bilateral trade agreement, anti-dumping measures as well as seasonal factor The primary result is that there is a relationship between fishery exports and economic growth in Vietnam Because the datasets of two interesting variables are time series, DF and ADF tests are employed to check whether the variables are stationary The tests exhibit unit roots in the datasets Under such the unit roots, two-stage least square regression has showed positive effect of fishery exports on Vietnamese GDP However, the DurbinWatson tests found a possible serial correlation problem in the model The first difference models have the same problem However, the Johansen tests present a cointegration between data values of fishery exports and the GDP Vector Error Correction Modeling thus was selected as an appropriate alternative With the results of Vector Error Correction models, there is a persistence of economic impact of fishery exports in yearly quarters The long run estimation derived in Equation 12 confirms an increase in fishery exports of Vietnam in all three quarters 2, 3, and relative to the first quarter GDP and fishery exports are estimated to have positive mutual effects in long run Although causing an estimated decrease in economic growth in short time, Vietnamese fishery exports, generally, are estimated to raise its national GDP in long time with its positive effects in accumulated two lags, during the period 1997- 2008 For the long run estimation, a conclusion can be pointed out that Vietnamese GDP will increase 7% with a double increase in its fishery exports value This has a great economic meaning in developing process of the economy An increase in exports of a sector is likely to create a growth in economy and in its turn, economic growth also boosts up a growth of a sector Vietnamese fishery exports would increase by 5.2% with 10% increase in its GDP The estimation results provide evidence for an important role of sectoral exports in national economic growth, consistent with previous findings by Awokuse (2003), Anh (2008), and Thompson (2009) In further implication, the results have also confirmed the contribution of exports to economic growth as documented in lots 47 of literature Vohra (200 1), for instance, finds exports have a positive impact on economic growth in India, Pakistan, the Philippines, Malaysia, and Thailand with data from 1973 to 1993 Another study by Lee and Pan (2000) provides evidence of Granger causal relations from exports to GDP in Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand Findings of Siddique and Selvanathan (2002) with cointegration and Granger causality tests for exports, imports, and economic growth in Thailand during 1953-1993 mention an economic growth causes exports These above studies, however, not include the foundation of growth theory or control for the exchange rate as in the present paper Confirming the role of export-led growth strategy in development economics, this study merits contributing to academic literature on international trade and economics with its empirical time series analyses as presented in this chapter To enhance the positive effect of fishery exports on economic growth, the sector of fisheries in Vietnam should be improved in its production and also export value The development in production can be achieved with an improvement in fishing technology, a growth in aquaculture, and expansion in water surfaces and species farmed Export value of fishery sector would be raised with an improvement in quality assurance and enhancement to meet international standards on food sanitation and safety Once Vietnam became WTO's member, the Vietnamese government needs to remove or 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