The determinants of Vietnam's exports to CPTPP members: A gravity model approach

Abstract

This study examines the determinants of Vietnam's export to CPTPP by applying the gravity model to panel data for the period of 2003-2016. Besides the conventional variables such as economic size and distance between trade parties; exchange rate, bilateral tariff, income gap, and foreign direct investment (FDI) are included in the model. The results show that the export of Vietnam to CPTPP is influenced by economic size (GDP), income gap, bilateral tariffs, FDI, and exchange rate. Among the impact factors, economic size, exchange rate, and income gap have significant impact on Vietnam's exports to CPTPP. The trade potential between Vietnam and CPTPP is also calculated based on gravity model results. Vietnam's export to CPTPP is predicted to expand significantly in its member markets.