International Competitiveness of Vietnamese Rice Sector: From the Viewpoint of Product Differentiation

Abstract

This study clarifies the international competitiveness of the Vietnamese rice sector from the viewpoint of product differentiation. To estimate world demand for rice, we use a linear approximate almost ideal demand system model. The main results are as follows. First, the absolute value of own price elasticity of demand for Vietnamese rice is more than 1; therefore, lowering the price is an effective strategy for Vietnam. Second, expenditure elasticity of demand for Vietnamese rice is 3.846, the highest value among the major rice exporters (Vietnam, Thailand, India, and Rest of the world), so Vietnam can get the greatest advantage to expand exporting rice because we can expect that the world will spend more on rice. Third, based on the results of cross price elasticities, Vietnamese rice has an international competitiveness from the viewpoint of product differentiation because Vietnamese rice as a product differs from Thai and Indian rice, and their prices do not significantly affect the demand for Vietnamese rice.