Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper explores how the expansion of labor-intensive manufacturing exports resulting from the United States-Vietnam Bilateral Trade Agreement in 2001 translated into wages of skilled and unskilled workers and the skill premium in Vietnam through the channel of labor demand. In order to isolate the impacts of trade shock from the effects of other market-oriented reforms, a strategy of exploiting the regional variation in difference in exposure to trade is employed. Using the data on panel individuals from the Vietnam Household Living Standards Surveys of 2002 and 2004, and addressing the issue of endogeneity, the results confirm the existence of a Stolper-Samuelson type effect. That is, those provinces more exposed to the increase in exports experienced relatively larger wage growth for unskilled workers and a decline of (or a smaller increase in) the relative wages of skilled and unskilled workers. During the period 2000-2004, the skill premium increased for Vietnam's economy as a whole in the sample of panel individuals. Thus, the Stolper-Samuelson type effect appears to have mitigated but did not outweigh the impacts of other factors that contributed to the rise in the skill premium.

Agriculture --- Economic Theory & Research --- Free Trade --- Labor Markets --- Labor Policies --- Rural Development --- Skill premium --- Stolper-Samuelson theorem --- Trade liberalization --- Trade Policy --- Wage

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

International economic relations --- Southeast Asia --- Commerce --- International Commerce --- Business & Economics --- ASEAN. --- Economic conditions.

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Zonder onderwerpscode

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper explores the economic implications of a potential free trade agreement between India and the United States. A series of simulations is conducted assuming 100 percent ad valorem equivalent tariff cuts for goods and 50 percent cuts for services. The overall impacts are likely to be positive for the United States and India. While gains from trade creation are offset by trade diversion on the import side, both countries appear to gain from improved access on the export side. The United States is likely to gain largely through terms of trade improvements for its goods and services, as initial protection in India is particularly high. India would experience an expansion of exports and output, especially in textiles and apparel. As the United States and India are negotiating other free trade agreements, such as the Trans-Pacific Partnership and India's agreement with the Association of Southeast Asian Nations, the paper also explores how the effects of an India-United States free trade agreement are affected by prior free trade agreements. Adding an India-United States free trade agreement to prior agreements tends to bring additional welfare benefits to both countries. India would also gain substantially if it concluded a free trade agreement with the United States and then extended it to other partners. The results suggest that an India-United States free trade agreement might become a building block toward more liberal trade regimes.

Cge --- Economic Theory & Research --- Emerging Markets --- Free Trade --- Free Trade Agreement --- Trade Law --- Trade Policy

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

November 1999 - The static economic benefits of Vietnam's accession to the ASEAN Free Trade Area (AFTA) are likely to be relatively small. The gains from increased access to ASEAN markets would be small, and they would be offset by the costs of trade diversion on the import side. But binding commitments on protection rates under the AFTA plan could provide an important stepping stone to more beneficial broader liberalization. Vietnam's accession to the ASEAN Free Trade Area (AFTA) has been an important step in its integration into the world economy. Fukase and Martin use a multiregion, multisector computable general equilibrium model to evaluate how different trade liberalization policies of Vietnam and its main trading partners affect Vietnam's welfare, taking into account the simultaneous impacts on trade, output, and industrial structure. They conclude that: The static economywide effects of the AFTA liberalization to which Vietnam is currently committed are small. On the import side, the exclusion of a series of products from the AFTA commitments appears to limit the scope of trade creation, and the discriminatory nature of AFTA liberalization would divert Vietnam's trade from non-ASEAN members; Vietnam's small initial exports to ASEAN make the gains from improved access to partner markets relatively modest. Since Singapore dominates Vietnam's ASEAN exports and initial protection in Singapore is close to zero, there are few gains from preferred status in this market; When Vietnam extends its AFTA commitments to all of its trading partners on a most favored nation basis, its welfare increases substantially - partly because of the greater extent of liberalization, partly because the broader liberalization undoes the costly trade diversion created by the initial discriminatory liberalization, and finally because of the more efficient allocation of resources among Vietnam's industries; AFTA, APEC, and unilateral liberalizations affect Vietnam's industries in different ways. AFTA appears to benefit Vietnam's agriculture by improving its access to the ASEAN market; Broad unilateral liberalization beyond AFTA is likely to shift labor away from agriculture and certain import-competing activities toward relatively labor-intensive manufacturing. Reduced costs for intermediate inputs will benefit domestic production. These sectors conform to Vietnam's current comparative advantage, and undertaking broad unilateral liberalization now seems a promising way to facilitate the subsequent development of competitive firms in more capital- and skill-intensive sectors. By contrast, more intense import competition may lead some import substitution industries (now dependent on protection) to contract; The higher level of welfare resulting from more comprehensive liberalization implies that the sectoral protection currently given to capital-intensive and strategic industries is imposing substantial implicit taxes on the rest of the economy; All the above suggests that AFTA should be treated as an important initial step toward broader liberalization. Binding international commitments in AFTA and, in due course, at the World Trade Organization can provide a credible signal of Vietnam's commitment to open trade policies that will help stimulate the upgrading of existing firms and investment in efficient and dynamic firms. This paper - a product of Trade, Development Research Group - was prepared as part of the AFTA Expansion Project in collaboration with the East Asia and Pacific Region. The authors may be contacted at efukase@worldbank.org or wmartin1@worldbank.org.

Access --- Capital Goods --- Comparative Advantage --- Currencies and Exchange Rates --- Debt Markets --- Domestic Industries --- Domestic Production --- Economic Theory and Research --- Emerging Markets --- Exports --- Factor Endowments --- Finance and Financial Sector Development --- Free Trade --- Free Trade Area --- Import Competition --- Intermediate Inputs --- International Economics & Trade --- Law and Development --- Macroeconomics and Economic Growth --- Markets and Market Access --- Openness --- Private Sector Development --- Public Sector Development --- Tariff --- Trade Creation --- Trade Diversion --- Trade Law --- Trade Liberalization --- Trade Patterns --- Trade Policies --- Trade Policy --- Trade Regime --- Unilateral Liberalization