Economic Cooperation in the Greater Mekong Sub-Region

Le, Binh Hai; Nguyen, Dang Quyen; Vu, Kieu Trang; Luu, Hiep Ngoc; Taghizadeh-Hesary, Farhad

doi:2020.35.2.240

The Journal of Economic Integration 2020 June;35(2) :240-263.
DOI: https://doi.org/10.11130/jei.2020.35.2.240

Economic Cooperation in the Greater Mekong Sub-Region

Binh Hai Le, ¹ Dang Quyen Nguyen, ² Kieu Trang Vu, ² Hiep Ngoc Luu, ³ Farhad Taghizadeh-Hesary, ⁴

¹Diplomatic Academy of Vietnam, Vietnam
²Centre for Applied Economics and Business Research, Vietnam
³University of St Andrews, UK
⁴Waseda University, Japan

Corresponding Author: Hiep Ngoc Luu ,Email: nhl3@st-andrews.ac.uk

ABSTRACT

This paper investigates the impact of regional economic cooperation between Vietnam and its partners during the 2000-2015 period, focusing on the Greater Mekong Sub-region (GMS). Overall, the GMS represents a significant portion of Vietnam’s trade portfolio. China is the dominant trading partner in the GMS, exhibiting strong influence over Vietnam’s trade, especially its imports. However, using the gravity model of trade, we find that Vietnam has not benefited from GMS cooperation, as exemplified by its significant trade deficit, particularly with China. We further find that human capital enhancement and financial development are key factors to facilitate Vietnam’s trade, and mitigate its trade deficit with other GMS member countries. To this end, this study provides some important policy implications for the Vietnamese government as well as policymakers in other countries, when trading with larger partners in the context of regional economic cooperation.

JEL Classification

F13: Trade Policy; International Trade Organizations
F15: Economic Integration
C23: Models with Panel Data; Longitudinal Data; Spatial Time Series
O53: Asia including Middle East

Keywords: Regional Economic Cooperation | Greater Mekong Sub-region | Vietnam | Trade | Gravity Model