tiểu luận kinh tế lượng THE FACTORS AFFECTING THE QUANTITY OF VIETNAM’S TIMBER AND WOODEN PRODUCTS EXPORTED TO FOREIGN NATIONS

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS******** FINANCIAL ECONOMETRICS REPORT THE FACTORS AFFECTING THE QUANTITY OF VIETNAM’S TIMBER AND WOODEN PRODUCTS EXPORTED TO F

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS

********

FINANCIAL ECONOMETRICS REPORT

THE FACTORS AFFECTING THE QUANTITY OF VIETNAM’S TIMBER AND WOODEN PRODUCTS

EXPORTED TO FOREIGN NATIONS Class: Financial Econometrics KTEE310.1 Lecturer: MSc Nguyen Thuy Quynh Members: 1 Vu Phuong Anh – 1813340009

2 Pham Bui Hanh Duyen – 1813340020

3 Nguyen Phan My Duyen - 1816340018

4 Dong Nguyen Thanh Hai – 1810340001

5 Nguyen Quynh Nga – 1813340042

Ha Noi, 12/2019

ABSTRACT 1

SECTION I: OVERVIEW OF THE TOPIC 3

SECTION II: MODEL SPECIFICATION 14

1 Methodology 14

2 Theoretical model specification 14

3 Describe the data 16

SECTION 3: ESTIMATED MODEL AND STATISTICAL INFERENCES 37

1 Estimated Model 37

2 Diagnosis Testing 39

3 Hypothesis Testing 45

4 Recommendation 50

CONCLUSION 52

REFERENCES 54

APPENDIX 1 55

APPENDIX 2: DO-FILE 59

The scope of our research regards factors that might have momentous impacts on thequantity of Viet Nam’s timber and wooden products being exported to foreign nations.The panel analysis within our project was carried out using data from differentcountries (Germany, Netherlands, USA, Japan, England, France, …) in the periodfrom 2001 to 2016 There are 5 elements being researched in our data, including thequantity of Viet Nam’s timber being imported by other countries, the population,timberland, GDP of import countries and the geographical distance from Viet Nam tothese countries

We genuinely conducted a wide variety of tests so as to evaluate the importance of theexamined elements to Viet Nam’s wood exports The tests we used are hypothesistesting, diagnosis testing, …

Ultimately, the results have shown that there is seemingly a close correspondencebetween the aforementioned independent variables and the explained variable

Thanks to the adequate and comprehensive tests as well as sufficient data collecting,our group were capable of acquiring a more extensive knowledge about the economy

in general and Viet Nam’s timber exports in specific We can also develop a furtherunderstanding over the disturbances that contribute to the fluctuation of Viet Nam’stimber exports Consequently, Viet Nam’s government is now able to impose radicaland plausible policies to our timber industry based on the collected data as well asconducted tests

Nowadays, in our contemporary society, wooden products have become truly intimateand crucial to our lives It is indisputable that everyone loves wooden floors, woodenfurniture and so on Unlike some developed nations, Viet Nam has the merits of thevast area of forest, and an ancient timber industry In fact, our craftsman are capable ofmaking really sophisticated and brilliant products, albeit not as ingenious andluxurious as some countries Nonetheless, our products still yield a surprisingly wellfinish and quality with a decent price Hence, Viet Nam’s economy in recent yearswitnessed a proliferation in the timber industry, with the prosperity of numerous woodcompanies Nonetheless, our timber exports do have some significant fluctuationssometimes Subjectively speaking, there must be some addressable reasons for thisphenomenon

Inevitably, in order to ensure our timber industry’s development and our wood exports,

it is of importance to figure out this phenomenon’s dominant justifications

Having researched about Viet Nam’s wood industry, we assume that there areelements attributing to those unstable exports We examined this assumption with thetools provided from econometrics and the software STATA Our model includes fivevariables, one is the dependent variable (Viet Nam’s timber exports) and the rest areindependent variables (the quantity of Viet Nam’s timber being imported by othercountries, the population, timberland, GDP of import countries and the geographicaldistance from Viet Nam to these countries) We hope that these variables will besufficient for our research and facilitate the analysing and testing processes

Governments, firms, organisations and everyone can use our project as a referencematerial for their researching purposes or as a step to develop our economysubstantially In spite of our objective knowledge and efforts, there might still be someinexorable mistakes our study We look forward to receiving your feedback on ourwork so that we can refine our project and enhance our perceptions

SECTION I: OVERVIEW OF THE TOPIC

Historically, many researches have been carried out about the quantity of Vietnam’stimber and wooden products being exported to foreign nations and the factors thathave impact on it

According to a study from General Statistics Office of Vietnam, Vietnam is a leadingwood exporter in ASEAN, ranks 2nd in Asia and 5th in the world in terms of exportrevenue from forestry products Vietnam also accounts for 6% of the global timber andwooden furniture market which is estimated at 130 billion USD

Besides, many trade agreements and documents that have been signed so far will set

up legal corridors and mechanisms to encourage market expansion for the forestrysector

Taking everything into consideration, we can see a lot of development potential inwood exporting in the future However, there is no research which include all thefactors that affect forestry sector in Vietnam, especially trading market of timber andwooden furniture Therefore, we decided to study and research about “The factorsaffecting the quantity of Vietnam’s timber and wooden products exported to foreignnations” to find out how these elements have impact on the exporting quantity oftimber and wooden products

1 Definition of each variable:

1.1 Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the total monetary or market value of allthe finished goods and services produced within a country's borders in a specific timeperiod

Timber harvesting involves planning harvest and reforestation; cutting treesand moving them to a landing; processing, sorting and loading; and transportingmaterials Annual timber harvested area of imported countries is acreage of forestareas which have been exploited for wood every year in countries that import timberfrom Vietnam.

1.4 International economic relation

International economic relation is an information system in the informationsociety It is also a social and market-based control system rather vividly reflects itscurrent state It affects global alliances, globalization, and the economic health ofnations

1.5 Economic distance

Economic distance has two distinct yet interrelated definitions One is arelative measure of household well-being based on a percentage of median income,another is an absolute difference in per capita income between social groups

of international trade, its origins, and its welfare implications International tradepolicy has been highly controversial since the 18th century up to our days.International trade theory and economics itself have developed as means to evaluatethe effects of trade policies

2.1 Adam Smith's model

Adam Smith was an 18th-century philosopher renowned as the father of moderneconomics and a major proponent of laissez-faire economic policies The core of

Smith's thesis was that humans' natural tendency toward self-interest (or in modernterms, looking out for yourself) results in prosperity Smith argued that by givingeveryone freedom to produce and exchange goods as they pleased (free trade) andopening the markets up to domestic and foreign competition, people's natural self-interest would promote greater prosperity than with stringent government regulations.This free-market force became known as the invisible hand, but it needed support tobring about its magic.

Adam Smith describes trade taking place as a result of countries having absoluteadvantage in production of particular goods, relative to each other Within AdamSmith’s framework, absolute advantage refers to the instance where one country canproduce a unit of a good with less labor than another country

2.2 The Ricardian Model

The Ricardian Model of Trade is developed by English political economist DavidRicardo in his magnum opus On the Principles of Political Economy and Taxation(1817) It is the first formal model of international trade Ricardo strengthens the casefor free trade by giving it a theoretical framework based on the logic of comparativeadvantage This concept is of such historical importance in the field of economics thatwhen Nobel laureate Paul Samuelson was once questioned by a self-importantmathematician to "name one proposition in all of the social sciences which is both trueand non-trivial, he responded confidently, "comparative advantage."

Like all other economic theories, the Ricardian Model makes a number of basicassumptions to construct an imaginary world: There are only 2 countries Theyproduce 2 goods Production requires only 1 input, labor, which is limited in amount inboth countries and is perfectly immobile (i.e strict border control) Opportunity costbetween the goods is constant in each country (Graphically, the production possibilityfrontier is a straight line) There is neither transaction cost nor transportation cost

By definition, a country has absolute advantage over the other if it is moreefficient at producing both goods than the other country A country has comparativeadvantage in producing a certain good if the opportunity cost of producing that good islower than in the other country Ricardo observes that an absolute advantage does not

necessarily imply a comparative advantage As long as the relative cost of production

is different in the 2 countries, comparative advantage exists

Under autarky condition (no trade), each of the two countries produces somecombination of the 2 goods Once trade becomes possible, they are motivated tospecialize fully in the production of the good in which they have a comparativeadvantage, thus allocating their scarce resources (labor) to its most productive uses Inthe aggregate, people in both countries end up consuming more of both goods thanthey did in the absence of trade Since more consumption means greater satisfaction(using economic jargon, equilibrium shifts to a higher indifference curve), trade allowboth countries to improve their welfare The Ricardian Model concludes therefore thatinternational trade benefits all participants

2.3 Heckscher–Ohlin model

The Heckscher-Ohlin model is an economic theory that proposes that countriesexport what they can most efficiently and plentifully produce Also referred to as theH-O model or 2x2x2 model, it's used to evaluate trade and, more specifically, theequilibrium of trade between two countries that have varying specialties and naturalresources

The model emphasizes the export of goods requiring factors of production that acountry has in abundance It also emphasizes the import of goods that a nation cannotproduce as efficiently It takes the position that countries should ideally exportmaterials and resources of which they have an excess, while proportionately importingthose resources they need

The Heckscher-Ohlin model evaluates the equilibrium of trade between twocountries that have varying specialties and natural resources The model explains how

a nation should operate and trade when resources are imbalanced throughout theworld The model isn't limited to commodities, but also incorporates other productionfactors such as labor The Heckscher-Ohlin model explains mathematically how acountry should operate and trade when resources are imbalanced throughout the world

It pinpoints a preferred balance between two countries, each with its resources

2.4 Stolper-Samuelson theorem

According to the Stolper-Samuelson theorem, the export of a product which isrelatively cheap, abundant resource makes this resource scarcer in the domesticmarket Thus, the increased demand for the abundant resource leads to an increase inits price and an increase in its income Simultaneously, the income of the resourceused intensively in the import-competing product decreases as its demand falls

Simply put, this theorem indicates that an increase in the price of a product risesthe income earned by resources that are used intensively in its production Conversely,

a decrease in the price of a product reduces the income of the resources that it usesintensively The abundant resource that have comparative advantage realizes anincrease in income, and the scare resource realizes a decrease in its income regardless

of industry This trade theory concludes that some people will suffer losses from freetrade even in the long-term

2.5 New trade theory

New Trade Theory (NTT) is an economic theory that was developed in the 1970s

as a way to predict international trade patterns NTT came about to help us understandwhy countries are trade partners when they are trading similar goods and services This

is especially true in key economic sectors like electronics, food, and automotive Wehave cars made in the United States, yet we purchase many cars made in othercountries

These are usually products that come from large, global industries that directlyimpact international economies Those tablets we talked about earlier are a perfectexample The United States both produces them and also imports them NTT arguesthat, because of substantial economies of scale and network effects, it pays to exporttablets to sell in another country Those countries with the advantages will dominatethe market, and the market takes the form of monopolistic competition

Monopolistic competition tells us that the firms are producing a similar productthat isn't exactly the same, but awfully close According to NTT, two key concepts

give advantages to countries that import goods to compete with products from thehome country:

Network effects are the way one person with a good or service affects the value

of that good or service to others The value of the product or service is increased as thenumber of individuals using it increases This is also sometimes called the bandwagoneffect Consumers like more choices, but they also want products and services withhigh utility, and the network effect offers increased utility to some goods and servicesover others

Economies of scale are the situations where there are savings in costs that aregained by early entry into a market or an increased production capacity It is alsopossible to benefit from this concept if entering a new industry with a lot of money andresources means that a company is able to quickly reach efficiency The leverageformed by both of these core concepts has formidable effects on lowering the averagecost of a unit produced, which means that some countries can still sell their products inother countries when they are so similar

2.6 New new trade theory

The realm of international trade theory has entered a new stage in the 21stcentury, with active use of firm-level data and a next-generation trade theory thatcould be termed "New" New Trade Theory bursting into the mainstream

Exports account for a large proportion of gross domestic production in countriesaround the world, but it has come to light in recent years that only a small minority offirms actually engages in export However, neither old nor new trade theories wereable to explain the fact that exporting firms comprise only a very few highlyproductive companies A scenario in which Company A in a given industry exportswhile Company B in the same industry does not a scenario hypothesized by traditionaltrade theories or New Trade Theory Both the trade theories of Ricardo andHeckscher-Ohlin and New Trade Theory (at least within an industry) presumerepresentative firms equal in productivity (i.e., firms qualitatively the same)

Melitz (2003) indicated the new source of trade gains When lowered tradebarriers stimulate competition on a global scale, low-productivity firms that had beenprotected theretofore by the trade barriers are forced to withdraw from the market,replaced by the increased production volume of high-productivity firms As aconsequence, the average productivity of a country on the whole rises This rise inaverage productivity means a rise in people's real income; people become wealthierthrough the natural selection of firms on a global scale It can be understood fromMelitz (2003) that heavy protection given to a domestic industry can inhibit thefunctioning of natural selection and block a rise in productivity.

2.7 Gravity model

The gravity model of international trade in international economics is a modelthat, in its traditional form, predicts bilateral trade flows based on the economic sizesand distance between two units

The model was first introduced in economics world by Walter Isard in 1954 Themodel has been used by economists to analyze the determinants of bilateral trade flowssuch as common borders, common languages, common legal systems, commoncurrencies, common colonial legacies, and it has been used to test the effectiveness oftrade agreements and organizations such as the North American Free Trade Agreement(NAFTA) and the World Trade Organization (WTO) (Head and Mayer 2014) Themodel has also been used in international relations to evaluate the impact of treatiesand alliances on trade (Head and Mayer) The model has also been applied to otherbilateral flow data (also 'dyadic' data) such as migration, traffic, remittances andforeign direct investment

The model has been an empirical success in that it accurately predicts trade flowsbetween countries for many goods and services, but for a long time some scholarsbelieved that there was no theoretical justification for the gravity equation However, agravity relationship can arise in almost any trade model that includes trade costs thatincrease with distance

The gravity model estimates the pattern of international trade While the model’sbasic form consists of factors that have more to do with geography and spatiality, the

gravity model has been used to test hypotheses rooted in purer economic theories oftrade as well One such theory predicts that trade will be based on relative factorabundances.

3 Related Published Researchers

One study in World Trade Institute names “The panorama for Vietnam’s

Timber Industry with Vietnam-EU Free Trade Agreement (EVFTA): Opportunities and challenges” by author Ha Cong Anh Bao in 2016 This study aims to identify and

analyzing both advantages and disadvantages of the EVFTA to Vietnam’s timberindustry, based on the main research question: To what extent is Vietnam’s Timberindustry affected by VEFTA? The author’s hypothesis is that VEFTA will positivelyimpact to boost the import and export activities of Vietnam timber industry Thishypothesis is clarified based on the analysis of tax SMART/WITS model incomparison with other competitors exporting timber to the EU market such asIndonesia, China, Malaysia, Thailand and Brazil; combined with an analysis of theactual import – export of Vietnam’s timber industry to the EU market based on thesecondary data from The World bank, ITCand primary data by interviewing specialistsand local furniture exporters to the EU market

Research by Vu Thi Minh Ngoc and Hoang Thi Ngoc Dung (2014) byqualitative research methods with descriptive statistics has shown that in order todevelop export markets for forest products in general and wood products in particular,Vietnam needs to focus on afforestation strategies to provide wood raw materials,support the state on policies to develop forest product processing industry, improvecompetitiveness for businesses and effectively operate production value chains

Research by Vu Thu Huong and partner (2014) also by qualitative analysis, theauthor has shown that Vietnam's international integration, foreign investment intoVietnam, access to markets, large-scale, reliance on raw materials will be factorsaffecting Vietnam's wood processing and export activities in the near future Also with

a qualitative research approach, Tran Van Hung (2015) suggested that factors ofdomestic labor resources, foreign investment in the wood processing industry, the

development of the forestry sector were favorable factors, to develop woodproduction and export Meanwhile, the factors of imported raw materials, lowtechnical capacity of wood processing enterprises, competition of traders arechallenging factors for wood processing and export.

A study by To Xuan Phuc and Kerstin Canby (2010) investigate about

“Overview of Forest Governance and Trade” This report use quantitative methods,compiled information on issues related to Vietnam’s role as one of the world’s largestmanufacturing centers for the wood products trade, particularly as it related tosourcing of legally produced wood It analyzed options for the Vietnamesegovernment and the European Commission if they agreed to proceed with a ForestLaw Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreement(VPA) Plans to proceed with a FLEGT VPA subsequently started in 2010 With alarge proportion of their wood products exported to the most environmentally-sensitivemarkets in the US and Europe and to a lesser extent in Japan and Australia, Vietnam’sindustry, like its competitors in Indonesia and China, are potentially vulnerable tothese shifts, or can seize this as an opportunity, particular in the plywood, woodfurniture and wood flooring sectors Sourcing timber from abroad including theneighboring countries, Vietnamese industry are exposing to various kinds of risk such

as timber is illegally harvested, wood harvesting in violation of traditional or civilrights, wood harvested from forest with high conservation values, conversion timber,etc

One more research by To Xuan Phuc with partners (2015) on Vietnam'swoodchip export in 2012-2014, although it has not been proved by a quantitativemodel, has provided in-depth discussions about the impact of the woodchip industry,furniture industry The argument is that the development of woodchip industry willcause a shortage of wood materials for the production of wood products and alsocontrary to this argument However, this is a good reference to add to the model offactors affecting the export of wood products

In “Asia - Pacific Forestry Sector Outlook Study II” (09/2009), Forest Science

Institute of Vietnam (FSIV) gave a research about “Vietnam Forestry Outlook Study”.The report present a comprehensive picture of the current forestry sector situation inVietnam, recent trends and achievements in the national forestry sector and scenariosfor the future development of the sector to 2020 To implement this study, the ForestScience Institute of Vietnam (FSIV) was assigned by the Ministry of Agriculture andRural Development (MARD) as the focal point with the responsibility of establishing anational working group to collect data and prepare reports according to FAOrequirements This report answered some questions like: “How have Vietnam’s forestresources (include also NWFPs and firewood) changed over the past years?” or Whatachievements have timber and forest product processing industries attained especially

in terms of timber product export?”

4 Research hypothesis

H1: GDP of the importing country has a positive impact on the export

GDP of the importing country: This factor was shown in the initial study by Jan

Tinbergen in 1962 GDP of the importing country represents an increase in the nation'sincome, thereby increasing the demand for pepper use and increase imports Theexporting country may then increase its export supply to the importing country Thisfactor has affected exports of many countries' goods such as sugar, raisins, and coffee(M.evela, 2002; G Delamini et al., 2016) In particular, it has been confirmed to have

a positive effect on the export turnover of wooden products of many countries(Priyono, 2009; C Jordana and Eita, 2011; Buongiorno, 2016)

H2: Population of the importing country has a positive impact on the export

Population of the importing country: Population of the importing country represents

the size of the import market In theory, the importer's population is more likely toimport and thus will increase the exporter's export volume This factor was added tothe commercial appeal model by later studies In fact, it has a positive impact on boththe export furniture industry (C.Jordaan and Eita, 2011) and many other export

industries (Miran, 2013; M.Oumer & P.N & eeswara, 2015; M Ebaidalla and

A Abdalla, 2015; G Delamini et al., 2016)

H3: The timber harvested area of the importing country has the opposite impact

to the export of the exporting country

Timber harvested area of the importing country: The attractive commercial model

of the timber sector indicates that the more a country's timber harvested area, the more

it will be able to self-supply wood for its country, from that reduces wood importsfrom other countries

H4: The distance between the exporting country and trading partners will have a

negative impact on its exports

Distance between countries: This is the initial element in the traditional commercial

attractive model and the foundation of the model's name The closer the distancebetween the exporting and importing countries, the better the ability to “attract” eachother and trade with each other more than the countries far from each other According

to this approach, this factor has a negative impact on the country's export turnover Ithas an impact on a country's exports in many products such as coffee, sugar, raisins(M.evela, 2002; Khiyav et al., 2013; M Oumer and PN and eeswara, 2015; M.Ebaidalla and A.Abdalla 2015; G Delamini et al., 2016) and export furniture(C.Jordaan & Eita, 2011; S Maulana & N Suharno, 2015)

SECTION II: MODEL SPECIFICATION

1 Methodology

We are going to examine whether every independent variable has influence on thedependent variable or not by using multiple regression model Therefore, we decide touse the software STATA to analyse the data thanks to its convenient user interface andeasy to use

We use panel data for several reasons First of all, panel data will increase thenumber of observations as they are quite limited if considered as time-series and cross-sectional data Furthermore, panel data can help us conduct more detail researches andhas better control over not – observed factors Those factors might vary in differentsubjects This is really necessary in reducing errors and variances in our estimations

This data choice is also going to lessen the chance of multicollinearity in variablesand make the parameters’ estimators more precise and accurate

In order to estimate parameters in the model with panel data, we use 3 differentmethods: The Ordinary Least Square method or OLS; the Fixed – effect model or FE;the Random – effect model or RE Our group established and tested the regressionmodel using STATA 14

2 Theoretical model specification

a Specify the model

Based on the theoretical basis as well as previous studies in Section I, we have builtthe econometrics models to study the effects of variables on the volume of timberexported to some of Vietnam's trading partners

Q = f (GDPi, POPi, Si, Dis)

(PRF) Q = β0 + β1 ∗ GDPi + β2 ∗ POPi + β3 ∗ Dis + β4 ∗ Si + ui

(SRF) Q =^β 0 + ^β1 ∗ GDPi + ^β2 ∗ POPi + ^β 3 ∗ Dis + ^β 4 ∗ Si + ui

Whereas:

o Q: Quantity/The amount of wood exported to importing countries (ThousandUSD)

o GDPi: Gross Domestic Product (GDP) of importing countries (trillion USD)

o POPi: Population (people)

o Dis: Geographical distance between Vietnam and the partner countriesimporting wood (kilometre)

o Si: Land covered with timber-producing forests (square kilometre)

o β0: Constant coefficient

o β1, β2, β3, β4: Slope coefficient of each independent variables

o ui: Disturbance term

b Explain the variables, proxies to measure and their units

To explain the variables we have the following table:

Table 2.1: Variables description, proxies to measure and their units

type Unit

Expected sign

1 Q Quantity/The amount of wood

exported to importing countries

Dependent variable

ThousandsUSD

2 GDPi Gross Domestic Product (GDP) of

importing countries

Independent variable

Independent variable

Kilometre

-5 Si Land covered with

timber-producing forests

Independent variable

Squarekilometre -

c Dependent variable? Independent variables? Their theoretical relationships?

o Dependent variable: Q

o Independent variables: GDPi, POPi, Si, Dis

An independent variable (GDPi, POPi, Dis, Si) is the variable that is changed or controlled in a scientific experiment to test the effects on the dependent variable.

A dependent variable (Q) is the variable being tested and measured in a scientific

experiment The independent and dependent variables may be viewed in terms ofcause and effect If any of those independent variables (GDP, population, geographicaldistance between Vietnam and the partner countries importing wood, land coveredwith timber-producing forests) changed, then an effect is seen in the amount of woodexported to importing countries Remember, the values of both variables may change

in an experiment and are recorded The difference is that the value of the independentvariable is controlled by the experimenter, while the value of the dependent variableonly changes in response to the independent variable

3 Describe the data

a Specify the source(s) of data

The data collected is in the form of secondary data and panel data, showinginformation on factors affecting wood production exported to 7 major markets,including total national income, population, the geographical distance betweenVietnam and the importing countries, land covered with timber-producing forests Thefigures were taken in the period from 2001 to 2016

Table 3.1: Source of data

Name of variable Source of data

b Descriptive statistics and interpretation for each variable

o Des: to provide the meaning and the measurement of the variables

o Sum: to provide the statistic indicators of the variables.

Command Sum indicates the number of observations (Obs), mean, standard deviation(Std Dev), min and max of variables

o Tab: distribution of values of variables

- The amount of wood exported to importing countries:

The amount of wood exported to importing countries ranged from 2752.781 to809388.7 thousand USD with the same frequency (1) and percent (89%)

- Gross Domestic Product (GDP) of importing countries

GDP ranged from 378.3761 to 6203 trillion USD with the same frequency (1) andpercent (89%)

- Population

Population ranged from 1.94e+07 to 1.28e+08 people with the same frequency (1) andpercent (89%)

- Geographical distance between Vietnam and the partner countries importing wood

Distance ranged from 3109 to 11565 kilometre with the same frequency (1) andpercent (89%)

- Land covered with timber-producing forests:

Timberland ranged from 29674 to 3477568 square kilometre with the same frequency(1) and percent (89%)