The Impact of Free Trade Agreements on Terms of Trade: A Case Study in Vietnam
Journal Title: Journal of Economics, Finance and Management Studies - Year 2025, Vol 8, Issue 06
Abstract
This study examines the impact of Free Trade Agreements on Vietnam’s terms of trade, a key indicator of trade quality and national welfare. While FTAs have expanded Vietnam’s trade volume, their effect on terms of trade remains unclear, especially given the country's reliance on low-value-added exports and imported inputs. Using provincial-level data, the research highlights regional disparities and provides insights to support more effective trade and development policies. This study uses a panel dataset of 63 Vietnamese provinces from 2019 to 2023 (315 observations) to analyze the impact of FTAs on terms of trade, in which the study proposed economical control variables as GRDP, inflation and labor productivity. The study finds that FTAs significantly improve Vietnam’s terms of trade, but their effectiveness depends on strong domestic foundations. Key internal factors such as regional economic development, inflation control, and labor productivity also play critical roles. These results highlight that trade outcomes are shaped by both external liberalization and internal economic capacity. These findings practically call for a comprehensive policy approach such as enhancing infrastructure, maintaining macroeconomic stability, improving labor productivity, streamlining trade procedures, diversifying export markets, promoting sustainable trade, and strengthening institutional coordination.
Authors and Affiliations
Quan Nguyen Van , Le Tran Dan,
Keywords
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- EP ID EP769841
- DOI 10.47191/jefms/v8-i6-66
- Views 9
- Downloads 0
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