Trade and Development in Vietnam: Exploring Investment Linkages

摘要

This paper presents and uses a new, stylized single country dynamic CGE model toexplore the trade-development linkages in Vietnam. Application of this framework involvesaddressing three basic questions:1. Does a model that properly determines capacity additions and more fully capturesmacroeconomic accounting and growth dynamics predict trade levels in a satisfactorymanner?2. Are those capacity additions determined by trade liberalization, and if so, whichaspects of trade liberalization?3. Under this framework what are expected impacts of trade liberalization initiatives,such as past bilateral trade agreements and recent WTO accession, taking into accounttheir potential effect on incentives to invest via both tariff changes and institutionalreforms?We also explore the role of the state in determining investment patterns, since the government ofVietnam has played a crucial role in setting both the aggregate level and sectoral pattern ofinvestment in the past. But recently there has been a recovery of foreign investment as well as anupsurge of investment by the domestic private sector. Moreover, Vietnam’s WTO accessionagreement was as much about incentives to FDI as it was about tariff concessions, and it spurredongoing institutional reforms that impact the investment climate.