MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY =====()00 MASTER THESIS PROMOTING THE EXPORT OF TEXTILES AND GARMENTS: THE CASE STUDY OF VIETNAM Course: Master of International Trade Policy and Law NGUYEN HOANG SON Hanoi - 2021 MINISTRY OE EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS PROMOTING THE EXPORT OF TEXTILES AND GARMENTS: THE CASE STUDY OF VIETNAM Code: 8310106 Course: Master of International Trade Policy and Law Student’s code : 1906060212 Student's name: NGUYEN HOANG SON Assoc. Hoang Xuan Binh Hanoi - 2021 ACKNOWLEDGEMENT I wish to take this opportunity to thank all the people who have helped me during the time of accomplishing this research. Without the help, support, and motivation, this thesis would not have been possible. First and foremost, I would like to express my deep gratitude to my lecturer and supervisor, Assoc.
Hoang Xuan Binh, for his precious advice and encouragement throughout the research. Without his encouragement, this study would not have been feasible. I would also like to give my sincere appreciation to all lecturers and officers in the Faculty of Postgraduate Studies and Faculty of International Economics, Foreign Trade University, Hanoi. Last but not least, special thanks to my fellows, who have remained my trusted source of support through times.
Sincerely, Hanoi, 2021 Nguyen Hoang Son 1 TABLE OF CONTENTS. il LIST OE ABBREV LA TIONS. vill SUMMARY OF THESIS RESEARCH RESULTS (ABSTRACT). Ratlonale of the research.
Objectives and missIlons of researchh.---- --- +22 ++s+s+s+z+zzzz+zzz+zzzzzs+ 2 2. Objectives of research 8. Missions of researchh.-- + 5+ 2z 252 S 2E 2x28 SE SE E2 2E xe crcrrcrr re 2 3. Research SCOpeC AT.
3 6 Research significance and confribufion. LITERATURE REVIEW PIN. Definition ofexport activity and eXpOort turnOVeT. The concept oŸ€XpOTt aCfIVIẨV.
_ The role OŸ€XpOFS. International trade theories. The Heckscher-Ohlin theory and revealed comparative advantage. __ Theorles ofgravity model .--¿ + +52 5s++s+++s+z+zzzzzxzezezereezxree 11 PIN ?uoðc ca.
_ The foreign research of the factors affecting export. _ The domestic research ofthe factors affecting export. Overview of experimental foreign and domestic studies. 2222225 S2 SE cz szxczcrcreerec 23 E3.
Qualitative research methods.-- +2 +5 szs+zz£+zSzzSzzczzczxczzczczrccec 24 3. Classification and systematizatlon ofthe theory method. _ Analysis-synthesis method. Descriptive statistics method.
Quantifative research method using the panel data model. Methods of estimating the panel data regression model. Model selection test theOTIS. Defects ofthe regression model.
RESEARCH RESULTS AND DISCUSSIONS. Overview of Vietnam textile and garment export acfIvities. _ The structure of garments and textiles products in export. Overview of Vietnam textile and garment eXpOoFfs.
_ Factors affecting Vietnam textile and garmenft eXpOrts. Factors affecting supplÌy. Factors affecting demand. Factors hindering or afttracting International trade.
Descriptive statistics of variables. Testing the ft and type of model. Test the fit of the model 44. Defects in the model AA.
Comparison to the research results to previous studies. CONCLUSIONS AND POLICY IMPLICATIONS. Policy Impli€afIOIS. Based on the GDP per capifa of Vietnam.
Based on the GDP of1mporting counfries. Based on the population growth rate of the Importing counfry. Based on the real exchange rate between VND and import currency. Limitations and further research direCfIO'4.
_ Further research directiOns. 74 REFERENCES APPENDIX LIST OF ABBREVIATIONS GDP Gross Domestic Product RCA Revealed Comparative Advantage CMT Cut the fabric, Make the garments, Trim the garments CAGR Compounded Annual Growth rate GLS Generalized least squares OLS Ordinary Least Square REM Random Effects Model FEM Fixed effects model USD United States dollar RCA Revealed Comparative Advantage H-O Heckscher-Ohlin FDI Foreign Direct Investment WTO World Trade Organization EU European Union NAFTA | North American Free Trade Agreement ASEAN _| Association of Southeast Asian Nations APEC Asia-Pacific Economic Cooperation SITC Standard International Trade Classification OIC Organization of Islamic Cooperation RTA Regional trade agreements VND Vietnam Dong FTA Free trade agreements LM Lagrange Multiplier accreditation VI VIF Variance Inflation Factor IMF International Monetary Fund UN United Nations UNCTAD | United Nations Conference on Trade and Development OE Omissions Excepted US United States Covid-19 | Coronavirus disease of 2019 EFTA European Free Trade Association EVFTA _ | European-Vietnam Free Trade Agreement CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership EAEU Eurasian Economic Union VN Vietnam HS Harmonized Commodity Description and Coding System Vii LIST OF FIGURES Figure 3.1: Research procedure of the theS15.--- + 252525252 *+2+2£z£+z+E+eze>zezx 23 Figure 4.1: Vietnam textile and garment export value in the period 2000-2020.2: The largest textile and garment import markets of Vietnam.3: Ranking on E-Government index of Vietnam and ASEAN.4: Vietnam personal spending Index. ----- 252525252 s+szz£z>+z+zzzzz>z=zx 47 Figure 4.5: LPI of Vietnam and the largest textile and garment partners.6: Logistics costs per GDP of some countries in 2018(%). 51 vill LIST OF TABLES Table 2.1: Summary of experimental research resuÏfs.1: Data source of the variables im the model .1: Vietnam textile and garment industry labor force during 2017-2020 .2: Vietnam FTAs till May 2021 .3: Observation, average value, standard deviation, minimum value maximum value of each varIable.---- 2-2222 +2 +22 S+S+z£+E+E+E£zE+EEzE+Ezzzzzzzcrzcr sec 55 Table 4.4: Results of OLS, REM, and FEM models on the impact of factors on Vietnam textile and garment export at the first test.5: Results VIF values of the variables In the mode .6: Results of OLS, REM, and FEM models on the impact of factors on Vietnam textile and garment export at the second test.7: Results VIF values of the variables In the mode .8: Results of the suitable FEM.-- 2-2 5222222222 £+2£zE+E£zEzEEzEzzzzzezezxczxe 60 Table 4.9: Comparison with previous foreign sfudies.
--- 252 525+s+ssss<52 63 1X SUMMARY OF THESIS RESEARCH RESULTS (ABSTRACT) The garment and textile export plays an important role in the national economy and global trade. It not only serves the increasingly high and diversified demand of customers but also that industry helps many countries create jobs for the workers and contribute more and more to the national budget and promote development of the economy. The thesis has investigated factors affecting the export of textiles and garments on a comprehensive view together with the export activities, identifying their definitions, determinants, measurements and analyzing their impacts and providing policies insights. From the basic concepts of export activities, this thesis gives an outlook on the important factor affecting export performance of Vietnam recently and shows how to promote export activities.
By carrying out a static linear panel data analysis on annual export data between Vietnam and 35 major trading partners from 2001 to 2020, the thesis intends to analyze the impact of factors on Vietnam garment and textile export turnover. The empirical results obtained from a static linear panel data (fixed effects model) analysis specifies that trade costs play the most significant role in determining the export value between Vietnam and its trading partners with negative and positive effects. The significant determinants of Vietnam garment and textile export value include the population of importing country, Gross Domestic Product (GDP) of importing country and GDP of Vietnam GDP per capital of Vietnam, real exchange rate. Accordingly, the main thesis research results suggest policy implications to enhance competitiveness and increase export growth sustainably.
The thesis contributes to the literature by providing an inclusive knowledge and their significance factors on the Vietnam garment and textile export recently. The garment and textile industry has attracted much attention on many countries over the years but very few studies were implemented for the case of Vietnam. Therefore, this research becomes reasonable and necessary to perform. Rationale of the research In the context of international economic integration, Vietnam is one of the countries with a very high export growth rate.
According to the General Department of Customs, in the period 2000-2020, export turnover was very high, export value increased nearly 18 times, from 15 billion USD in 2001 to 264 billion USD in 2019. A significant contribution to export turnover includes the textile and garment industry. According to the General Department of Customs, from 2013 to 2016, Vietnam textile and garment export turnover has always ranked second among the most exported products of Vietnam. Therefore, textile and garment export has become one of the most important export sectors of the economy, bringing a large source of foreign currency to the country, contributing a huge part of the gross domestic product GDP.
Textile is considered one of the key sectors of many economies. The trade size of the global textile and apparel market accounts for 8 - 8.8% of the total global trade, by value, reaching about 1,400 - 1,550 billion USD. Over the years, Vietnam Textile and Garment Industry has made a strong development process and plays an increasingly important role in the growth of the economy. The export turnover of the textile and garment industry in 2019 reached 38.9 billion USD (Department of Statistics), accounting for 12.4% of the total export turnover of the country, ranking 2 in the world in terms of textile exports, only below China and ranked fourth in terms of global textile production scale (Ministry of Industry and Trade, 2019).
To have certain successes in textile and garment export in the past period, scientists and leaders of Vietnam made comments and analyzed the reasons leading to these successes as follows: Firstly, Vietnam takes advantage of its comparative advantage from abundant labor resources and low labor costs, secondly, Vietnam has policies to create favorable conditions and decrease difficulties for businesses to compete and develop healthily, moreover, businesses are also very proactive in investing in high-tech equipment and expand export markets. However, the above statements only come from a subjective point of view, statistical observations, not based on scientific arguments about the correlation of explanatory factors with the value of textile and garment export turnover. In addition, the textile and garment industry still has certain barriers that affect textile exports such as supporting industries have not yet developed commensurately, enterprises still export mainly in the form of processing, the value chain of the textile and garment industry has many limitations, raw materials for processing and production are still dependent on foreign raw materials. To increase the value of Vietnam's textile and garment exports, we need to learn and study the influencing factors, thereby implying appropriate policies to promote this activity to gradually improve the economy.
Therefore, the author has chosen the thesis: “Promoting the export of textiles and garments: The case study of Vietnam” 2. Objectives and missions of research 2. Objectives of research The research purpose of the thesis is to propose policy to promote Vietnam textile and garment exports. Missions of research To accomplish the above research purpose, the thesis has the following research missions: — Generally analyze research related theories, empirical studies on factors affecting Vietnam textile and garment exports.
— Systematize theoretical bases on factors affecting Vietnam textile and garment exports — Analyze the garment and textile export situation of Vietnam — Analyze factors affecting Vietnam textile and garment exports from a macro perspective; — Policy implications to promote Vietnam textile and garment exports 3. Object and scope of research 3. Objectives of research The thesis focuses on analyzing the factors affecting Vietnam textile and garment exports and propose policy implications 3. Research scope —Scope of research in terms of content: The thesis studies specifically in the factors affecting Vietnam textile and garment exports and provide policy implications to improve the situation.
—Scope of research in terms of space: The thesis studies the export factors of Vietnam in the textile and garment industry within Vietnam and the 35 largest textile importing countries of Vietnam, including the USA, China, Japan, Germany, the UK, France, India, Italy, Canada, Korea, Russian Federation, Brazil, Australia, Spain, Mexico, Indonesia, Netherlands, Switzerland, Turkey, Saudi Arabia, Argentina, Singapore, South Africa, Belgium, Denmark, Thailand, Hong Kong, Austria, Poland, the UAE, Cambodia, Malaysia, Sweden with the data of three HS codes 61, 62, 63. —Scope of research in terms of time: The study uses secondary data in the period 2001-2020 4. Research question — What are the the factors affecting Vietnam textile and garment exports?