Cơ cấu thương mại hàng hóa Việt Nam – Hàn Quốc giai đoạn 20012016: Những vấn đề đặt ra và giải pháp tt tiếng anh

VIETNAM ACADEMY OF SOCIAL SCIENCES GRADUATE ACADEMY OF SOCIAL SCIENCES TRUONG QUANG HOAN VIETNAM-KOREA COMMODITY TRADE STRUCTURE OVER THE PERIOD 2001-2016: ISSUES AND SOLUTIONS Major: International Economics Major Code: 31 01 06 SUMMARY OF PHD THESIS IN ECONOMICS Hanoi - 2019 The PhD Thesis is completed at: Graduate Academy of Social Sciences Vietnam Academy of Social Sciences Supervisors: Assoc Prof Dr Nguyen Duy Dung Assoc Prof Dr Nguyen Huy Hoang Reviewers: Reviewer 1: Assoc Prof Dr Ha Van Hoi Reviewer 2: Assoc Prof Dr Do Huong Lan Reviewer 3: Assoc Prof Dr Tran Thi Lan Huong The PhD Thesis is defended at the PhD Thesis Evaluation Council, Graduate Academy of Social Sciences, No 477 Nguyen Trai Street, Thanh Xuan District, Hanoi Available at: - National Library of Vietnam - Library of Graduate Academy of Social Sciences INTRODUCTION The importance of the thesis subject The rapid growth in commodity trade exchange between Vietnam and South Korea (hereafter Korea) since the two sides established the Comprehensive Partnership relation in 2001 has helped Vietnam and Korea become important trading partners to each other’s However, the commodity trade structure between Vietnam and Korea over the years has revealed many noticeable issues Vietnam has always experienced trade deficit with Korea Especially the deficit has tended to rapidly increase in recent years Vietnam’s exports to Korea are mainly raw materials, or processed and manufactured goods with low technological content Additionally, Vietnam has not exploited comparative advantages, incentives from regional liberalization, economic integration and growth in attracting foreign direct investment (FDI) to basically improve the trade structure with Korea in a positive manner Many existing studies have mentioned Vietnam-Korea economic relations, but still lacked deep and comprehensive works on the Vietnam - Korea commodity trade structure In fact, along with the important role and position of Vietnam-Korea trade for each country, there are many issues between Vietnam and Korea to consider regarding economic relations as the whole and trade relations in particular now and in the coming time In such a context, it would be necessary to have in-depth and comprehensive studies on the Vietnam-Korea commodity trade structure to identify, evaluate the results and the issues; thereby providing feasible orientations and solutions to improve the Vietnam-Korea commodity trade structure in next years 2 Research purpose and research task of the thesis 2.1 Research purpose To analyze the current situation of the Vietnam – Korea commodity trade structure in the period 2001 - 2016; thereby, identifying results, limitations and problems, as well as proposing solutions to improve the Vietnam – Korea commodity trade structure in the coming years 2.2 Research task (i) Systematizing the theoretical basis and building the analytical framework for evaluating bilateral commodity trade structure (ii) Analyzing the current situation of the Vietnam – Korea commodity trade structure in the period 2001 - 2016; thereby, pointing out the results and problems (iii) Proposing solutions to improve the Vietnam – Korea commodity trade structure in the coming years 2.3 Research question The thesis focuses on answering the following research questions: 1) What are the theoretical basis and research methods used to analyze and assess bilateral commodity trade structure? 2) How has the Vietnam – Korea commodity trade structure changed in the period 2001-2016? What are the achievements and issues in the changes of the Vietnam – Korea commodity trade structure? 3) What are the orientations and solutions to improve the Vietnam - Korea commodity trade structure in the coming time? Research object and scope of the thesis 3.1 Research object Vietnam-Korea commodity trade structure over the period 2001-2016 3.2 Scope of research About space: Vietnam, Korea and some East Asian countries About time: the 2001 - 2016 period About content: trade in goods; direct trade between Vietnam and Korea, commodity export structure, commodity import structure Methodology and research method of the thesis 4.1 Methodology The thesis uses dialectical materialism, historical materialism as well as economic theories to explain the changes that have taken place in the Vietnam – Korea commodity trade structure over 20012016 period 4.2 Research method The thesis employs trade pattern indices including trade complementary index (TCI); trade intensity index (TII); export concentration index (HHI); intra-industry trade index (IIT); export product sophistication index (EXPY); and the normalized revealed comparative advantage index (NRCA) The thesis also uses the methods of classifying international goods according to the importexport industry; technological content; factor intensity and stages of production Finally, the thesis employs OECD’s database of trade in value added (TiVA) New scientific contribution of the thesis Firstly, the thesis clarifies theoretical basis for bilateral commodity trade structure, thereby providing an analytical framework for researching the Vietnam - Korea commodity trade structure; Secondly, the thesis clarifies the situation, results and issues in the Vietnam - Korea commodity trade structure; Thirdly, the thesis proposes solutions to improve the Vietnam – Korea commodity trade structure in the coming time Theoretical and practical meaning Theoretically, the thesis adds and completes the general analytical framework on bilateral commodity trade structure Thesis’ results provide additional evidence on the shift and its determinants on trade structure between a developing economy (Vietnam) and a developed economy (Korea) Practically, thesis’ analyses and proposed solutions can be the useful reference channel for relevant Vietnamese organizations in developing appropriate strategies and measures to enhance trade relations with Korea in future Thesis outline Besides the Introduction, List of references and Annexes, the thesis is divided into chapters as follows: Chapter 1: Overview of literature related to the thesis theme Chapter 2: Theoretical basis for bilateral commodity trade structure Chapter 3: Research method for bilateral commodity trade structure Chapter 4: Current situation of Vietnam-Korea bilateral commodity trade structure in the period 2001 - 2016 Chapter 5: Orientations and solutions to improve the Vietnam Korea bilateral trade structure Chapter OVERVIEW OF LITERARURE RELATED TO THE THESIS THEME 1.1 Studies related to the theoretical basis of commodity trade Typical studies include: Lall (2000), “The technological structure and performance of developing country manufactured exports, 1985‐98”; Gaulier, Lemoine and Ünal-Kesenci (2007), “China’s integration in East Asia: Production sharing, FDI & hightech trade”; Hinloopen and van Marrewijk (2008), “Empirical Relevance of the Hillman Condition for Revealed Comparative Advantage: 10 Stylized Facts”; Hanson (2010), “Sources of export growth in developing countries”; Hirschman (1964), “The paternity of an index”; Balassa (1965), “Trade liberalisation and “revealed” comparative advantage”; Laursen (2000), “Trade specialisation, technology and economic growth: Theory and evidence from advanced countries”; Grubel and Lloyd (1975), “Intra-industry trade: the theory and measurement of international trade in differentiated products”; Michaely (1996), “Trade preferential agreements in Latin America: an ex-ante assessment”; Hausmann, Hwang and Rodrik (2006), “What you export matters” 1.2 The studies on Vietnam-Korea trade as part of general relationship between the two countries or at the wider scope Typical studies include: Ngo Xuan Binh (2013), “VietnamKorea relations in the new international context”; Nguyen Hoang Giap, Nguyen Thi Que and Nguyen Van Duong (2011), “VietnamKorea relations from 1992 to now and development prospects until 2020”; Le (2007), “ASEAN-Korea co-operation in the development of new ASEAN members”; and Steinberg (2010), “Korea’s Changing Roles in Southeast Asia: Expanding influence and relations” 1.3 In-depth studies on Vietnam-Korea trade relations Notable studies include: Nguyen Hong Nhung and Chu Thang Trung (2005), “The reality of Vietnam - Korea trade relations”; Ngo Xuan Binh and Dang Khanh Toan (2010), “Promoting economic relations between Vietnam and Korea”; Nguyen Khanh Doanh (2011), “Vietnam - Korea trade relations: Prospects and solutions”; Nguyen Tien Dung (2011), “The impact of ASEAN-Korea free trade area on Vietnam’s trade”; MUTRAP (2011), “Assessing the impact of ASEAN-Korea Free Trade Agreement on Vietnam’s economy”; Phan and Ji (2012), “An Analysis of Korea-Vietnam Bilateral Trade Relation”; Phan and Ji (2016), “Potential Economic Impacts of the Vietnam - Korea Free Trade Agreement on Vietnam” 1.4 Other in-depth studies on commodity trade Notable studies include: Nguyen Chien Thang and Tran Van Hoang (2015), “Vietnam’s trade structure: Long-term challenges”; Truong (2016), “Technological Structure in Vietnam - Thailand bilateral trade relations”; PhD thesis of Nguyen Thi Minh Huong (2012), “Structure of Vietnam - Japan commodity trade in the 20012010 period”; Vo Thy Trang (2016), “Factors affecting internal trade in agricultural products between Vietnam and APEC”; Vu Thanh Huong (2016) “Vietnam - EU Free Trade Agreement: Impact on trade in goods between the two sides and implications for Vietnam” 1.5 General assessments and issues the thesis focusing on Firstly, most studies in Vietnam have used a statistically descriptive approach; Secondly, foreign studies have had more indepth analysis of relations and trade structure between Vietnam and Korea, between ASEAN and Korea However, the aspects related to dynamic comparative advantage, value added, the sophistication of export products, context analysis and recommendations have not been addressed specifically and comprehensively Inheriting the existing research works, the thesis focuses on solving the following contents: systematizing and building the theoretical basis; formulating and applying analytical framework and research methods to analyze and evaluate the Vietnam - Korea bilateral commodity trade structure in the 2001 - 2016 period; thereby, clarifying the results, problems and causes, as well as proposing solutions to improve Chapter THEORETICAL BASIS FOR BILATERAL COMMODITY TRADE STRUCTURE 2.1 Basic Concepts - Inter-industry trade: is understood as commercial activities taking place in between different industries - Intra-industry trade: is the type of trade that a country exports and imports the same product groups and industries Intra-industry trade can be divided into horizontal intra-industry trade and vertical intra-industry trade - The commodity trade structure: is the total value of goods constituting a country’s trade; those parts are intertwined, interacting with each other and are consistent with certain economic and social conditions of the country - Appropriate commodity trade structure: is a structure with harmonious combination of constituent parts, allowing maximum exploitation of comparative advantages, national resources, and partner’s strengths; and that contributes to promoting trade, especially in the export sector, while also creating conditions to quickly and effectively improve the national trade structure - Improving the commodity trade structure: is the structural shift of components of the national trade in a positive direction, consistent with the development of social labor division, production resources, as well as scientific and technological advances of the country, region and the world 2.2 Theoretical foundation A number of important international trade theories that are the theoretical foundation for analyses of commodity trade structure are divided as follows: classical and neoclassical international trade theories including theory of comparative advantage, theory of factors of production; and modern trade theories including theory of economies of scale, theory of production networks and global value chains, and national competitive advantage theory 2.3 Basis for evaluating the efficiency of bilateral commodity trade structure The dissertation evaluates the efficiency of the Vietnam-Korea trade structure on the following basis and criteria: effectively exploiting comparative advantages, national resources and the level of meeting the demand for input import for production and consumption; quality and competitiveness of export products; value added of export products and the level of national participation in regional and international production networks; and sustainability of import and export structure 2.4 Factors affecting bilateral commodity trade structure 2.4.1 Natural conditions of the country 2.4.2 Conditions and strategies of socio-economic development, and competitiveness of enterprises 2.4.3 National comparative advantage 2.4.4 Relations and policies on trade development of each country 2.4.5 Policies to attract FDI, and business strategy and outward investment of each country Chapter RESEARCH METHOD FOR BILATERAL COMMODITY TRADE STRUCTURE 3.1 Researching bilateral commodity trade structure based on the use of international commodity classification systems 11 The thesis uses RCA and NRCA indices to calculate export products that Vietnam and Korea have comparative advantages as well as comparative disadvantages Chapter CURRENT SITUATION OF VIETNAM - KOREA BILATERAL COMMODITY TRADE STRUCTURE IN THE PERIOD 2001 - 2016 4.1 Overview of trade relations between Vietnam and Korea 4.1.1 Looking back on the history of Vietnam-Korea trade relations The goods exchange between Vietnam and Korea began at a modest level when Vietnam decided to implement economic reforms in the late 1980s However, it began to expand rapidly when the two countries established diplomatic relations in 1992 Vietnamese products exported to Korea in this period were mainly seafood, vegetables, coffee, clothes and furniture, while imported goods from Korea principally focused on fabrics and chemicals, petroleum products, trucks and spare parts 4.1.2 Export, import and balance of commodity trade between Vietnam and Korea after the year 2001 Bilateral trade between Vietnam and Korea expanded rapidly over time, from 2.1 billion USD in 2001 to 65.6 billion USD in 2018 Exports from Vietnam to Korea increased rapidly from 385 million USD in 2001 to 18.1 billion USD in 2018; while imports increasing from 1.7 billion USD in 2001 to 47.5 billion USD in 2018 Vietnam’s trade deficit with Korea expanded quickly, reaching 20.1 billion USD and 32.1 billion USD in 2016 and 2017 respectively, before reducing to 29.2 billion USD in 2018 4.1.3 The importance of Vietnam-Korea trade to each country 12 Vietnam and Korea have become increasingly important partners of each other, both in terms of export market and import market In particular, the importance of Vietnam-Korea trade to each country increased rapidly after the establishment of the AKFTA and Vietnam’s participation in the WTO (2006) Nevertheless, Vietnam still depends on trade with Korea rather than Korea’s dependence on trade with Vietnam 4.2 Situation of Vietnam-Korea commodity trade structure 4.2.1 Export-import products and export-import product groups Export-import structure between Vietnam and Korea has increasingly focused on the group of machinery, electronics and transport equipment, especially in Korea’s exports to Vietnam However, Vietnam still significantly relies on exports of textiles, leather goods and footwear embodied with cheap labour cost, which are also products Vietnam has comparative advantage over Korea and many other countries 4.2.2 Stages of production The research results show that the proportion of intermediate goods in Vietnam’s exports to Korea increased by about two times, up to 40.9% in 2016 Meanwhile, imports of Vietnam as well as of many other East Asian countries from Korea are also mainly intermediate goods 4.2.3 Technology content, factors of production and product sophistication 4.2.3.1 In terms of the technology content Vietnam’s export structure to Korea has changed in the direction of reducing the role of primary products and raw materials, while increasing the share of processing and manufacturing industries Meanwhile, Vietnam’s imports from Korea have increasingly concentrated on high-technological goods This affirms encouraging 13 changes in the quality of Vietnam - Korea trade structure in relation to the trade between Korea and other countries in East Asia 4.2.3.2 In terms of the factors of production From 2010 onwards, Vietnam has strongly reduced the dependence on exports of raw products to Korea, while increasing the contribution of technology-intensive products, up to 40% in 2016 However, Vietnam still depends significantly on labour-intensive products Regarding Korea, the share of technology-intensive export products to Vietnam has more than doubled, reaching 68% in 2016 4.2.3.3 In terms of the product sophistication The EXPY value of Vietnam’s exports to the Korean market has improved significantly, rising from 9.57 to 9.88 in the period 2001 2016 However, the sophistication in Vietnam’s export products to Korea is much lower than Korea’s export products to Vietnam In future, to maintain export growth to the Korean market, Vietnam needs to continue diversifying its export product portfolio; meanwhile, Korea can still increase exports to Vietnam by exploiting its existing product portfolio 4.2.4 Inter-industry trade, intra-industry trade, vertical intraindustry trade and horizontal intra-industry trade Over time, the share of inter-industry trade between Vietnam and Korea has continuously decreased, currently sharing only a small proportion, whereas intra-industry trade has continuously increased, which is evidence to the rapid growth of Vietnam-Korea trade as well as the improvements of diversifying import and export goods After the 2001-2007 period of decline, the IIT index between Vietnam and Korea began to improve drastically after 2013 This indicates that the structure of import and export goods between Vietnam and Korea is increasingly similar However, compared with other countries, except Indonesia, the IIT values between Korea and Vietnam is still much 14 lower than that between Korea with Malaysia, China, Thailand and the Philippines 4.2.5 Trade in value-added The most prominent feature is the domestic value-added in export between the two sides rapidly expanded in the period of 20062015 In particular, the domestic value added of Vietnam’s exports to Korea has improved faster than that of exports of many other East Asian countries In the period 2001-2015, the value-added of Korean exports to the world originating from Vietnam increased sharply, from a few tens of million USD to more than 1.1 billion USD, which was higher than that of Thailand and the Philippines, but much lower than those of Malaysia, Indonesia and China Meanwhile, Korea’s contribution as the source of value-added in Vietnam’s exports to the world soared to 5.2 billion USD in 2015, compared with more than 250 million USD in 2001 4.2.6 Diversity of export products The concentration of export goods between Vietnam and Korea fluctuated strongly but in general, the export structure between the two sides was relatively diverse The number of exported products from Vietnam to Korea had increased sharply but still much lower than the number of Korean exports to Vietnam 4.2.7 Export comparative advantage Vietnam has the strong advantage of agricultural and forestry export products However, despite the low NRCA value, Vietnam has begun to enjoy comparative advantages for machinery and electronic products Meanwhile, Korea’s export advantage to Vietnam has shifted sharply from light industrial products, processing industries such as footwear, cloths, leather and packaging, plastic and rubber to the technology and human–intensive manufactures such as machinery and electronics 15 4.2.8 The complementarity in Vietnam - Korea trade The trade structure between Vietnam and Korea has been mainly complementary rather than competitive, especially between Vietnam’s imports and Korea’s exports This shows that the potential for expanding Vietnam-Korea trade in the coming time is large if the two sides continue to fulfill their commitments to opening and liberalizing the market for each other 4.3 Results and issues in the Vietnam – Korea commodity trade structure 4.3.1 Results - In terms of efficiently exploiting export comparative advantages and national resources, and the level of meeting the demand for input imports for production and consumption: In general, the import and export structure between Vietnam and Korea is suitable with natural conditions, scientific and technical development level as well as the quality of human resources of each country - In terms of the quality and competitiveness of goods: Vietnam’s share of raw materials and resource-intensive exports to Korea fell sharply, while increasing the proportion of manufactures with hightechnology and capital-human content Furthermore, the number, types and competitiveness of export products from Vietnam to Korea have been improved Vietnam’s import products from Korea have higher quality that making certain contributions to improving Vietnam’s commercial structure with Korea - In terms of the value-added of export products and the degree of national participation in regional and international production networks: The contribution of the domestic sector to the value addition in Vietnam’s export goods to Korea has been increasing Also, the domestic manufacturing sector of Vietnam integrates deeper 16 into the regional production network of the Korean multinational companies and of other countries - In terms of the sustainability of the import and export structure: The sustainability of Vietnam’s commodity export structure has improved over time This improvement is reflected by the increasing contribution of manufactured products, gradual decrease of raw and resource-intensive products, which are easily affected by the disadvantages of the international market 4.3.2 The issues - The issues related to improving the efficiency of exploiting export comparative advantages, national resources and sources of imported inputs for production and consumption: In the long term, Vietnam needs to have adjustments to take advantage of the import of high-technology and human-intensive machinery and transport equipment from Korea, thereby further improving the production and export capacity of domestic companies At the same time, in order to maintain export growth, Vietnam needs to shift and create comparative advantages in production and export of goods using technological and capital-knowledge factors - The issue related to improving the quality and competitiveness of goods: Despite the improved quality and competitiveness of export products from Vietnam to Korea, there are still significant limitations, as expressed by the high proportion of low-technology and labourintensive export products Furthermore, despite the improvement in the number, models and types, Vietnam’s export products to the Korean market are still quite monotonous, not creating a strong attraction for Korean consumers In the future, to continue maintaining export growth, Vietnamese enterprises should improve the scientific and technology content, quality and competitiveness of export products 17 - The issues related to improving the value-added of export products and the level of national participation in regional and international production networks: Vietnam has significantly improved domestic value added in export to the Korean market but the contribution of Vietnamese enterprises has remained limited Therefore, developing supporting industries, increasing technology transfer from FDI sector to domestic enterprises, building product promotion strategies are almost mandatory requirements for Vietnam’s domestic enterprises to participate in stages of production with high value addition such as marketing activities and the production of original equipment and components - The issues related to improving the sustainability of import and export structure: The changes in Vietnam’s trade structure with Korea are mainly triggered by external factors, rather than the contribution of internal resources In the long term, such dependence can create adverse effects on Vietnam’s foreign trade activities as well as on the quality of Vietnam’s trade structure with Korea If Vietnam’s export structure does not shift to higher production chains, its revenue growth and value-added exports to the Korean market will be directly affected in next years 4.4 Factors affecting the Vietnam-Korea bilateral commodity trade structure 4.4.1 Positive impact factors The improvements of the commodity trade structure between Vietnam and Korea could be explained by the following factors: First, the Vietnam - Korea cooperation relationship has been constantly strengthened and developed in all fields; Second, Vietnam has achieved impressive results in attracting FDI, especially from Korean enterprises into manufacturing and processing industries; Third, the Vietnam-Korea economic structure has been mainly 18 complementary; Fourth, the natural, socio-economic conditions in Vietnam and Korea have created a push for trade relations of the two countries; Fifth, the trend of economic linkages between East Asian countries has been constantly increasing 4.4.2 Negative impact factors Factors negatively affect the shift in the Vietnam-Korea commodity trade structure including: Firstly, the model of economic development, production and export in Vietnam has still based on the advantages of land, natural resources and low-cost labour; Secondly, business - investment environment and policies as well as infrastructure system in Vietnam are much improved but still having considerable limitations; Thirdly, Vietnam is lacking essential supporting industries; Fourthly, the competitiveness of Vietnamese enterprises in general and enterprises having trade relations with Korea in particular has remained low; Fifthly, there are limitations in Vietnam in taking its advantage from FTAs involving Vietnam and Korea; Finally, Vietnam faces fierce competition from other economies of the region Chapter ORIENTATIONS AND SOLUTIONS TO IMPROVE THE VIETNAM - KOREA BILATERAL COMMODITY TRADE STRUCTURE 5.1 International, regional and domestic contexts affecting Vietnam-Korea trade relations in the next years 5.1.1 International context 5.1.2 Regional context 5.1.3 Domestic context 5.1.4 Vietnam - Korea free trade agreement 19 Domestic, regional and international contexts create advantages and challenges for promoting trade cooperation between Vietnam and Korea However, the advantages are still principal because of the most following crucial condition: Vietnam and Korea continue to hold the leading position in the economic policy of each party, in which Korea is expected to promote investment and industrial cooperation with Vietnam in future 5.2 Viewpoints and orientations to improve the Vietnam - Korea trade structure 5.2.1 In terms of export orientation The first is focusing on export products to Korea that Vietnam is having comparative advantage, while identifying and developing potential products for export expansion in future The second is increasing the contribution of products using high technological and capital-knowledge content The third is focusing on export products with high value and creating many jobs for Vietnamese workers The fourth is increasing export of capital and intermediate goods, while reducing export proportion of raw materials, consumption goods with low value addition The final is increasing export of products involving significant participation and contribution of Vietnam’s domestic business sector; while not encouraging export of products embodied with cheap labour, environmental pollution, or only creating benefits for foreign companies 5.2.2 In terms of import orientation The first is boosting imports from Korea with modern machinery, equipment and spare parts, necessary materials, with the emphasis on exploiting Korea’s production and export advantages The second is restricting imports from Korea the products that Vietnam can produce or luxury goods that have negative impacts on the environment and health as well as the stability of society The 20 third is flexibly applying restrictions on imports from Korea to protect domestic production 5.3 Solution to improve the Vietnam – Korea commodity trade structure 5.3.1 Building and implementing appropriate import and export orientation policies for the Korean market - In terms of export orientation: reducing export products to the Korean market with low value-added, increasing export products with high value addition; while restricting the export of unfavoured products - In terms of import orientation: Priority should be given to the import of capital goods, especially the modern equipment that Korea has advantages; while restricting the import of second-class and luxury goods 5.3.2 Diversifying export products to the Korean market Vietnam should increase trade in intermediate goods with Korea Furthermore, measures to encourage Vietnamese enterprises to develop new products, or diversify types and models of existing products, through investment in modern machinery and equipment, as well as skilled human resources and R&D activities should be especially priority 5.3.3 Efficiently exploiting the advantages from VKFTA Vietnam should continue to disseminate basic information on the VKFTA for enterprises and people so that they can grasp the core content of the agreement, the roadmap to implement, commitments and incentives regarding trade and investment between Vietnam and Korea The Vietnamese domestic enterprises should proactively apply modern quality management systems in order to meet very strict standards and requirements related to environment and health of the Korean market in VKFTA 21 5.3.4 Developing priority supporting industries Vietnam should develop and issue financial supporting policies for research and development activities, start-up activities of enterprises, especially small and medium enterprises (SMEs) The Vietnamese government should also have policies to assist human resource development in supporting industries Additionally, in the context of limited domestic resources, Vietnam needs to attract and encourage Korean enterprises and other countries having experience such as Japan, Malaysia and Thailand to invest and develop its domestic supporting industries 5.3.5 Enhancing FDI attraction, technology transfer, and industrial cooperation between Vietnam and Korea Vietnam should have the appropriate attracting FDI policy including FDI from Korea to promote export growth, and improve the production capacity of domestic enterprises Vietnam should also encourage and support Korean FDI enterprises to expand links with domestic enterprises in production and trade, especially supporting industries 5.3.6 Promoting and improving the efficiency of trade promotion activities towards the Korean market The Vietnamese government can act as an intermediary and sponsor for trade promotion activities with the Korean market as well as for similar programs of provinces and associations For Vietnamese enterprises, they should enhance activities to help understand consumption habits, import regulations, distribution channels and technical standards in the Korean market; while actively seeking Korean partners through developing marketing strategies, brand and product positioning, and strengthening trade promotion activities 22 CONCLUSION Along with the political, diplomatic and cultural development since the establishment of official diplomatic relations in 1992, the Vietnam-Korea trade exchange has achieved a very rapid growth, especially after the year 2000 when the AKFTA was established and Vietnam officially became a WTO member As a result, Korea and Vietnam have become each other’s important trading partners, both at regional and international levels However, Vietnam has often experienced the huge deficit with Korea, especially when the two have more opened their market to the other This has been partly reducing benefits Vietnam can enjoy from this impressive growth When analyzing the Vietnam-Korea commodity trade structure in the period 2001 - 2016, following conclusions can be drawn: 1) Vietnam has sharply reduced its exports to Korea over resourceintensive and unskilled labour–intensive products, and at the same time significantly increased the contribution of products with high scientific and technological content; 2) The domestic value-added content in Vietnam’s export products has significantly improved; 3) The rising intra-industry trade, especially intermediate goods such as telephone and machinery parts in the total trade between the two countries indicates that Vietnam has been integrating deeper into the regional and international production network of Korean multinational enterprises; 4) Vietnam’s import structure from Korea has been increasingly focused on the manufactures with high technology and capital - knowledge content, that has certain positive effects on improving its production and export capacity Improvements in Vietnam’s trade structure with Korea over the past decade are due to many factors including: (i) the development of Vietnam-Korea cooperation on all field; (ii) growing FDI attraction, 23 especially from Korea into Vietnam’s manufacturing and processing industries; (iii) the complementary trade structure between two sides; (iv) natural, socio-economic conditions of each country; (v) increasing economic linkages in East Asia region including Vietnam Besides positive results, the structural shift of Vietnam-Korea commodity trade over 2001 - 2016 still has many limitations and problems including: 1) trade deficit with Korea increases very fast; 2) the share of low technology-intensive and low-skilled labourintensive products in Vietnam’s export to Korea is still large; 3) The sustainability of export structure is low when relying heavily on FDI enterprises, especially Korean enterprises; 4) The domestic business sector’s participation in the value chain of production and export to Korea mainly focuses on simple stages such as processing and assembly; 5) The intra-industry trade ratio between Vietnam and Korea is low, showing that Vietnam has not yet effectively built and utilized economies of scale in trade exchange with Korea The basic causes of the above limitations and issues are as follows: (i) the dependence of model of economic development, production and export on the advantage of cheap labour and natural resources; (ii) unclear policy environment for business and investment attraction, and outdated infrastructure; (iii) lack of essential supporting industries; (iv) weak competitiveness of domestic enterprises, and not taking advantage of trade and economic agreements with Korea; (v) lack of separate trade policy for the Korean market; and (vi) increasing competition in export and attracting investment from Korea between Vietnam and other countries in the region Current and coming domestic, regional and international context would create many opportunities as well as challenges for the development of Vietnam - Korea trade relations, but the advantage is primarily This is because both enterprises and people of the two 24 countries have paid great attention to promoting economic, political, cultural and people-to-people cooperation between the two sides Promoting trade relations and especially improving the trade structure between Vietnam and Korea would require appropriate orientations and solutions Accordingly, improving the Vietnam – Korea trade structure should be oriented as follows: (1) focusing on export to Korea the products that Vietnam is having advantage, while developing commodities with high potential for growth in future; (2) focusing on export to Korea items with high-technological and highskilled labour content, and high value addition; (3) improving the export diversification to the Korean market; (4) promoting the import of original technology equipment from Korea, restricting the import products that can be locally produced, or unfavored import products The proposed solutions to improve Vietnam’s commodity trade structure with Korea are as follows Firstly, it is develop suitable policies of import and export orientation for the Korean market Secondly, it is effectively exploit advantages from VKFTA Thirdly, it is diversify export products, increase intra-industry trade exchange with Korea Fourthly, it is develop priority supporting industries Fifthly, it is strengthen FDI attraction, technology transfer, and Vietnam-Korea industrial cooperation Finally, it is improve the efficiency of trade promotion activities to the Korean market LIST OF PUBLISHED STUDIES Trương Quang Hoàn (2013), “Korea’s economic cooperation relations and CLMV countries: reality and recommendations”, Northeast Asia Studies, No (143), p 30-37 Trương Quang Hoàn (2017), “Vietnam-Korea commodity trade from the production stage”, Southeast Asia Studies, No (203), p 31-37 Trương Quang Hoàn (2017), “The structure of commodity trade between Thailand and Vietnam (2004-2013)”, International Journal of Thai Studies, Vol.10, Issue 1, p 73-97 Trương Quang Hoàn (2018), “Vietnam-Korea Trade from the Complexity of Goods”, Southeast Asian Studies, No (216), p 36-44 Trương Quang Hoàn (2018), “Bilateral trade relations between Vietnam and South Korea: Achievements, challenges and policies implications for Vietnam”, Vietnam’s Socio-economic Development, Volume 22, No.92, p 70-82 Đồng Văn Chung, Phạm Thanh Hà Trương Quang Hoàn (2018), “Trade between Vietnam and Northeast Asian economies: An approach from gravity model”, Review of World Economic and Political Issues, No (265), p 3-17 Trương Quang Hoàn Đồng Văn Chung (2018), “Vietnam – Korea commodity trade from the industry perspective and the contribution of production factors”, Review of Regional Sustainable Development, Vol 8, No 2, p 13-20 Trương Quang Hoàn (2019), “Vietnam-Korea trade relations from the perspective of intra-industry trade”, Southeast Asian Studies, No (226), p 24-32 Trương Quang Hoàn, Đồng Văn Chung Nguyễn Huy Hoàng (2019), “Determinants of Trade Flows and Trade Structure between Korea and ASEAN”, East Asian Economic Review, Volume 23, No (March 2019), p 55-88 (Indexed in Emerging Sources Citation Index (ESCI) of Clarivate Analytics) 10 Trương Quang Hoàn, Đồng Văn Chung Nguyễn Huy Hoàng (2019), “Taiwan – ASEAN Trade Relations: Trade Structure and Trade in Value Added”, China Report, Volume 55, No (May 2019), p 102-124 (Indexed in Emerging Sources Citation Index (ESCI) of Clarivate Analytics and SCOPUS of Elsevier) ... Vietnam and Korea”; Nguyen Khanh Doanh (2011), “Vietnam - Korea trade relations: Prospects and solutions”; Nguyen Tien Dung (2011), “The impact of ASEAN-Korea free trade area on Vietnam’s trade”;... internal trade in agricultural products between Vietnam and APEC”; Vu Thanh Huong (2016) “Vietnam - EU Free Trade Agreement: Impact on trade in goods between the two sides and implications for Vietnam”... increase exports to Vietnam by exploiting its existing product portfolio 4.2.4 Inter-industry trade, intra-industry trade, vertical intraindustry trade and horizontal intra-industry trade Over time,