WP-05: Regional integration in East Asia and its impacts on welfare and sectoral output in Vietnam

Economic impacts of some current and hypothetical regional FTAs on Vietnam’s welfare and sectoral output are assessed using a dynamic computable general equilibrium (CGE) model. Trade facilitation and endogenously determined sectoral productivity, which are part of the liberalization process, are incorporated in the model. The results show marginal gain of welfare for Vietnam and other members of FTAs. Welfare gains for Vietnam, as well as for some other ASEAN countries, are highest under ASEAN-China FTA. The results also reveal the importance of liberalizing the rice sector. When rice is excluded from trade liberalization, welfare gains of rice exporting and importing countries fall significantly. At the sectoral level, Vietnam’s manufacturing secotrs expand thanks to increase in output of textiles, garment, leather products and machinery. Agricultural production would expand if rice is liberalized, but contract otherwise.

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