tailieunhanh - Impact of transport costs on Vietnamese textile exports

Transport cost is a critical component that structure price of goods at destination points in international trade. This research explored and analyzed transport cost and its impact on export by gravity model. The two stage least squares (2 SLS) model in the estimation was used, in which for the first stage, the transport cost is regressed on a set of exogenous variables including five instrumental variables that affect transport cost, but do not affect exports. | IMPACT OF TRANSPORT COSTS ON VIETNAMESE TEXTILE EXPORTS Trinh Thi Thu Huong1 Pham Thanh Ha2 Nguyen Ngoc Lan3 Abstract Transport cost is a critical component that structure price of goods at destination points in international trade. This research explored and analyzed transport cost and its impact on export by gravity model. The two stage least squares 2 SLS model in the estimation was used in which for the first stage the transport cost is regressed on a set of exogenous variables including five instrumental variables that affect transport cost but do not affect exports. In the second stage the forecasted of transport cost enters as one of the regressors of the exports. A survey was conducted for data collection purposes. Results from the paper show that higher distance and poor partner port infrastructure leads to a notable increase in transport costs. Besides higher importer income depreciating real exchange rate and better logistics condition facilitate trade growth. In contrast greater transport costs distance and tariff significantly deter trade. Based on the research results the paper provides recommendations and solutions that encompass a series of policies to effectively reduce the transport cost in textile export in Vietnam Keywords transport cost textile export Vietnam international trade distance infrastructure tariff. Date of receipt 10th Jun. 2016 Date of revision 15th Date of approval 30th 1. Introduction Since Vietnam implemented trade reform policies and opened its doors for foreign investors export of textile products has been in a rapid progress and promises a fruitful future. Over the last decades average annual growth rate of Vietnam s textile export reached UN Comtrade among the fastest growing sector in Asia. Vietnam s textile products have been currently available in 180 countries and territories in the world and five continents from America Europe to Africa and Asia. According to Vietnam Textile Apparel Association .