“New trade theory”: New evidence from VietNam

Abstract

This paper employs Gravity model, first used by Tinbergen (1962), and a panel data that concludes 18 Vietnam’s main trading partners in the period from 1995 to 2011. This is for the purpose to examine whether Vietnam will trade more with the countries which have the similarity in size. The empirical results show that the index of country similarity in size promotes strongly Vietnam’s exports. By contrast, there is no evidence that demonstrates convincingly that this index induces the country’s imports. These results partly support for the “New trade theory” which was initiated in the late 1970s and the early 1980s.