Relationship between sectoral exports and economic growth a time series analysis for vietnamese fishery sector 1997-2008

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM- THE NETHERLANDS PROJECT FOR M.A. ON DEVELOPMENT ECONOMICS RELATIONSHIP BETWEEN SECTORAL EXPORTS AND ECONOMIC GROWTHA TIME SERIES ANALYSIS FOR .VIETNAMESE FISHERY SECTOR 1997 - 2008 . BQ GIAO DVC £JAO TAO TRlJONG D~l HQC KINH r{rP.HCM 9 THU VIEN . l13 By NGUYEN ANH TRAM SUPERVISOR: DR. NGUYEN MINH DUC MASTER OF ARTS IN ECONOMICS OF DEVELOPMENT HO CHI MINH CITY, DECEMBER 2009 CERTIFICATION "I certify that the substance of this thesis has not already been submitted for any degree and has not been currently submitted for any other degree. I certify that the best of my knowledge and help received in preparing this thesis and all sources used have been acknowledged in this thesis." NGUYEN ANH TRAM Date: 16/12/2009 ii ACKNOWLEDGMENTS No man is an island, entire of itself- John Donne The work of this thesis represents the concerted efforts of many individuals. One of the features is collaboration and certainly it required many acts of collaboration by quite a few people in order to come to fruition. Firstly, I am heartily thankful to my supervisor, Dr. Nguyen Minh Due, whose encouragement, supervision, and support from the preliminary to the concluding level enabled me to develop an understanding ofthe subject. Secondly, I would like to thank Prof. Karen Jansen, Dr. Nguyen Trong Hoai, and Dr. Tran Tien Khai for serving on my thesis committee, valuable suggestions, invaluable encouragement, insightful comments, and hard questions. I thank my friends, thirdly, for the stimulating discussions, and for all the help and fun we have had during the master course. Besides, I also give many thanks to all project teachers and staffs in Ho Chi Minh City. Further, I would like to express my sincere gratitude to my parents for patiently putting up with a daughter who could never get enough of school. Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project. 111 ABSTRACT Numerous studies in literature have tried to test the relationship between exports, especially sectoral exports, and economic growth. This paper examines the relationship with evidence from fisheries exports of Vietnam during 1997 to 2008. The contribution of fishery sector in Vietnamese Gross Domestic Products (GDP) may be mathematically calculated with statistical figures. However, the effects of fishery exports on the economic growth are yet to be thoroughly studied in an econometric approach. Descriptive and time series analyses in this thesis present positive effect of fishery exports on the Vietnamese economic growth in long run. The modern econometric approach with stationary and co-integration tests and vector error correction models used in this study also allows forecasting a persistence of the effects of fishery exports on Vietnamese GDP despite of different seasonal phase business. For the long run estimation, a double increase in its fishery exports value would raise the GDP by 7%; This has a great economic meaning in developing process of the economy. In reverse side, Vietnamese fishery exports would increase by 5.2% with 10% increase in its GDP. Confirming the· role of fishery exports in economic growth, it is necessary for the sector to improve its competitive capacity. Firstly, it should continue to obey international standards, keep negotiating to get benefits from existing regulations, improve domestic institutional management to attract more foreign investment. Particularly, the stakeholders of Vietnamese fishery exports should concern some main problems such as product's quality, marketing strategy, production cost, trade barrier and tariff as well. IV ACRONYMS AND INITIALS ADF Augmented Dickey-Fuller APEC Asia-Pacific Economic Corporation APFIC Asia-Pacific Fishery Commission BTA Bilateral Trade Agreement CPI Consumer Price Index EU European Union FAO Food and Agriculture Organization FISTENET Fisheries Scientific Technological Economic Information GDP Gross Domestic Product GNP Gross National Product GSO General Statistical Office ICT Information & Communication Technology OLS Ordinary Least Squares SBV States Bank of Vietnam USD The United States Dollars VECM Vector Error Correction Modeling WTO World Trade Organization v TABLE OF CONTENTS LIST OF TABLES ................................................................. ~ ................................... vii LIST OF FIGURES ............................................................ ~····································· viii Chapter 1. INTRODUCTION ····················································o••····························· 1 1.1. PROBLEM STATEMENT .........................................•............................•.....................•.................... 1 1.2. SCOPE OF THE STUDY ................................................................................................................... 3 1.3. RESEARCH OBJECTIVES ............................................................................................................... 3 1.4. RESEARCH QUESTIONS ..........................•....................•.•.•..............•.......•...................•................. 4 1.5. RESEARCH HYPOTHESIS .............................................................................................................. 4 1.6. METHODOLOGY AND DATA COLLECTION ................................................................................... 4 1.7. THE STRUCTURE OF THE THESIS ................................................................................................. 5 Chapter 2. LITERATURE REVIEW ........................................................................ 6 2.1. THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND TRADE .............................................. 6 2.2. THEORETICAL AND EMPIRICAL BACKGROUNDS OF SECTORAL EXPORTS .................................. 8 2.3. WHY FISHERY SECTOR WAS CHOSEN FOR THIS STUDY? ........................................................... 11 2.4. AN OVERVIEW OF VIETNAM FISHERY SECTOR ......................................................................... 15 2.5. BILATERAL TRADE AGREEMENT, THE UNITED STATES ANTI-DUMPING MEASURES AND VIETNAM FISHERY EXPORTS IN THE PERIOD 1997- 2008 ............................................................... 18 2.6. THE EXCHANGE RATE REGIME AND VIETNAM FISHERY EXPORTS 1997-2008 ...................... 19 2.7. CPI (CONSUMER PRICE INDEX) AND VIETNAM FISHERY EXPORTS 1997- 2008 ..................... 20 2.8. DEFINITIONS ...•.•.•................. ; .....•.•......................•.•..•.•.•.•......................•..•.....................•.......... 21 2.8.1. Fishery production ................................................................ :........................................... 21 2.8.2. Export................................................................................................................................. 21 2.8.3. Export growth .................................................................................................................... 21 2.8.4. Economic Growth .............................................................................................................. 21 2.8.5. Consumer Price Index- CPI ............................................................................................ 22 2.8.6. Antidumping measurement ............................................................................................... 23 2.8~7. Bilateral Trade Agreement (BTA) ..................................................................................... 24 2.9. EMPIRICAL ESTIMATION RELATED TO EFFECTS OF FISHERY EXPORTS ON ECONOMIC GROWTH ........................................................................................................................................................... 26 2.9.1. Dependent variable ............................................................................................................ 26 2.9.2. Independent variables ........................................................................................................ 26 2.9.2.1. Fishery Exports .......................................................................................................................... 26 2.9.2.2. Labor .......................................................................................................................................... 27 2.9.2.3. Exchange rate ............................................................................................................................. 27 2.9.2.4. Consumer Price Index ............................................................................................................... 28 Chapter 3. METHODOLOGY ................................................................................. 29 3.1. MODEL SPECIFICATIONS ....•...•..•..•.............................•.•.•......•.................•..•.•..•.•..•.••...•............. 29 3.2. DATA DESCRIPTION ................................................. ; ................................................................. 31 3.3. DATA FOR VARIABLES ............................................................................................................... 31 3.4. DUMMY VARIABLES ................................................................................................................... 32 Chapter 4. RESULTS AND DISCUSSION ............................................................. 33 4.1 DESCRIPTIVE ANALYSIS ........................•................................•.••.•... ,....................•.....•.....•.......... 33 4.2. ECONOMETRIC ANALYSIS .•.....•.•.......................•....•.•..•.......................••.•.••................................ 37 4.2.1. Stationary testing of real variables .................................................................................... 37 4.2.1.1. Unit root tests for log(YGNP) .............................................. :..................................................... 37 4.2.1.2. Unit root tests for log (REXR) .................................................................................................. .38 4.2.1.3. Unit root test for log (XGNP) .................................................................................................... 39 4.2.2. Two stage least square regression ..................................................................................... 39 Chapter 5. CONCLUSIONS AND SUGGESTIONS ............................................. 47 REFERENCES .......................................................................................................... 49 Vl LIST OF TABLES Table 1.1 Total Imports And Exports Of Vietnam In U.S Dollars ......................... 1 Table 2.1 Estimate Of Overseas Filipino Workers (December 2004) ••••••••.....•.•••••• 9 Table 2.2 Vietnam Exports Of Tra And Basa Fish (Tons) .................................... 24 Table 4.1 Descriptive Statistical Spreadsheet Of All Variables ............................ 36 Table 4.2 Covariance Matrix Spreadsheet Of All Variables ................................. 36 Table 4.3 Correlation Matrix Spreadsheet Of All Variables ................................ 36 TABLE 4.4A DF-GLS UNIT ROOT TEST FOR LOG (YGNP) ........................................................ 38 TABLE 4.4B ADF UNIT ROOT TEST FOR LOG (YGNP) .............................................................. 38 TABLE4.5ADF-GLS UNITROOTTESTFORLOG(REXR) ........................................................ 38 TABLE 4.5B ADF UNIT ROOT TEST ON LOG (REXR) ............................................................... 38 TABLE 4.6A DF-GLS UNIT ROOT TEST FOR LOG (XGNP) ................................................. ;·; .... 39 TABLE 4.6B ADF UNIT ROOT TEST FOR LOG (XGNP) ............................................................. 39 Table 4. 7 OLS of Log(YGNP) ................................................................................... 40 Table 4.8 The Regression Result For Equation 8 In The Second Stage ••••••••••••••• 41 Table 4.9 First Difference Regression For Log(YGNP) •••••••••••••••••••••••••••••••••••••••••• 42 Table 4.10 First Difference Regression For Log(XGNP) ....................................... 42 Table 4.11 Johansen Cointegration Test Summary ............................................... 43 Table 4.12 Vector Error Correction Estimates •••••••••••••••••••••••••••••••••••••••••••••••••••••• 44 Vll LIST OF FIGURES Figure 2.1 Reported Aquaculture Production In China (From 1950) •••••••.•.•••••••• 10 Figure 2.2 Vietnam's Oil Production And Consumption, 1998- 2008* •...••••.•••••• 11 Figure 2.3 Top Asia - Pacific Oil Producers, 2006* ............................................... 12 Figure 2.4 Vietnam's Primary Fishery Export Products In 2006 (Value Basis) .14 Figure 2.5 Vietnam's Fishery Products Export Market, 2006 (Value Basis) ••••••• 17 Figure 2.6 Time Line Of Standard US Antidumping Investigation ••••••••••••••••••••• 23 Figure 2. 7 Monthly Exports Of Frozen Fish Fillets To The US, •••..•..•.••••••..•...••••• 24 Figure 2.8 Values (US$ Millions), Rates Of Growth (Percentages), And Shares In Total Exports (Percentages) Of Vietnam's Exports To The U.S, 2000-2006 .• 25 Figure 4.1 GDP In Vietnam, 1997 - 2008 (Quarterly) ........................................... 33 Figure 4.2 Fishery Exports In Vietnam, 1997 - 2008 (Quarterly) ........................ 34 Figure 4.3 Exchange Rate VND/USD, 1997 - 2008 (Quarterly) •••••••••••••••.•.•••••••••• 34 Figure 4.4 Vietnam Consumer Price Index, 1997 - 2008 (Quarterly) •••••••••••••••••• 35 Figure 4.5 Us Consumer Price Index, 1997- 2008 (Quarterly) ............................ 35 viii Chapter 1. INTRODUCTION 1.1. Problem statement World trade has been expanded more and more, with global exports growing from $84 billion USD in 1953 to $6,272 billion USD in 2002 (HM Treasury, 2004). The figures demonstrate an increasing economical interdependence in the world nowadays relative to fifty years ago. However, the most prominent role in the increase is of developing countries and emerging markets; exports from developing countries as a whole accounted for 29 percent of world trade in 2001. Economic theory and empirical evidence also showed that economies with trade more tend to grow faster. Therefore, the fact that international trade or exports are always promoted by the Vietnam government is not an exception. Prior to the collapse of the Soviet Union, most of Vietnam's trade was with the former Soviet Union and Eastern European countries. Since 1991, the country's trade has diversified significantly. It has also expanded dramatically, reflecting a globalization process of the Vietnamese economy. In 1999, its openness (exports plus imports divided by GDP) reached the level of 84.5 percent and now (2009) about 170 percent, a useful indicator for an increasing global integration of a country.. Table 1.1 Total imports and exports of Vietnam in U.S dollars Trade (expressed in millions of US$) : Vietnam Exports Imports 1994 4,054 5,825 1995 5,448 8,155 1996 7,255 11,144 1997 9,184 11,592 1998 9,360 11,494 Source: United Nations. Monthly Bulletin of Statistics (September, 2000) Although Vietnam has consistently had trade deficits, the amount has narrowed with the boom in Vietnamese exports. For example, in 1989 exports were only 73.7 percent of imports. In 1999, exports had risen to be 98.9 percent of imports. In the period from 1997 to 2007, Vietnamese economy is prosperous in the context of global integration; especially Vietnam joined APEC at the .end of 1998 and signed the bilateral trade agreement with the United States in 2001. Since the milestones, 1 Vietnam's exports has continuously grown, leading to a remarkable increase in its international trade and openness. However, the global economy began to have the indicators of a crisis from the early months of 2008. It was caused by regression of the real estate market in America, and created a serious financial crisis in the United States. The crisis spread out over the world, from Europe, Latin America, Middle East, Russia, to Asia and Vietnam as well. Although Vietnam has been affected by the crisis later than the others, it stills has faced some problems because of its wide economic openness. An obvious effect of the global crisis is speedy decline of the world's import demand. That means Vietnam's exports in coming years will be suffer because Vietnam's economy is likely to follow an export-oriented growth. In Vietnam's export structure, although crude oil still stand on the first position in export revenues, labor intensive products such as agricultural and fishery products are very important exported products of the country. In these products, fisheries are prominent because fish resources represent natural capital and are a potential source of sustainable wealth for Vietnam. This wealth provides the opportunity for such resources to make an ongoing contribution to economic growth, poverty alleviation and people livelihoods as well (Due, 2008a, 2009a). Fishery exports also make significant contributions to the national economy through the generation of foreign exchange derived from international trade. Exports of fishery products have grown rapidly during last ten years. In fact, the aquatic products once contributed approximate 10% of whole national export revenues (Due, 2009a). Otherwise, income multiplier effects can potentially "trickle up" to the national economy ensuring that fisheries can support national economic growth through contributions to GDP. Although the Vietnamese fishery sector contributes to national GDP typically varied by 2.5-4.0 percent, it also generates a wide range of tax revenues, contributing to the national budget. Moreover, the major share of fishery exports have strong backward linkages with the other sectors both in terms of primary and value added commodities. Unfortunately, with high fluctuation of prices and the 2008 global crisis, global demand for fishery products may decline, and in its tum fishery exports may affect Vietnamese GDP growth rate because the country relies much upon exports for economic growth. 2 Therefore, there exist some questions to study such as how fishery exports effect Vietnam's economic growth in recent yeats and whether the effect is positive. To get answers, the research will start by estimating an econometric model in which fishery exports revenue is the interested explanatory variable and real GDP is the dependent variable. Some other controlling variables are included, such as exchange rate, CPI, CPI of the US, labor force, and dummy variables representing for annual quarters, 2001 Bilateral Trade Agreement between the US and Vietnam, 2003 antidumping tariff levied on Vietnamese catfish exported to the US. Furthermore, this study will employ the econometric results to figure out some suggesting for national economic development policies. The authorities may also use these results to refine, buttress, or in some ·cases, change their qualitative and subjective judgments in planning policies and strategies of development. 1.2. Scope of the study The first part of the study provides a brief and clear statement of the status and trends in the fishery exports in Vietnam, the major issues and challenges, focusing on fishery export data of a period 1997 - 2008 alongside with a short review of previous studies, investigation and the expectations. The second part and also the main part of the study will be devoted to examine the relationship between fishery exports and economic growth of Vietnam. It will also suggest priorities and projected resource requirements, and the ways in which the suggestion might be practicized as Vietnam continues its journey in the future. 1.3. Research objectives Although there is lack of empirical studies on a clear relationship between fishery exports and economic growth, Vietnamese government has tried in practice to promote fishery export growth to boost up its economy. This thesis, therefore, examines the fishery export patterns of Vietnam's economy to figure out its effects on the economic growth based on time series data in the period 1997 to 2008 to give some recommendations to improve and adjust fishery export policies in particular and trade policies in general. Through these adjusted and improved policies, the government can help the economy overcomes the global crisis in short run as well as stimulates stability economic growth in long run in Vietnam. In short, specific objectives of this thesis are to examine: (1) the relationship between fishery exports and economic growth, and (2) the persistence of the effects of exports during different phases of the seasonal business 3 1.4. Research questions With the mentioned objectives, this thesis would provide evidence to answer two following questions: 1. Has Vietnam's economic growth been affected by fishery exports? 2. Has the persistence of the effects of fishery exports duri~g different phases of the seasonal business? Obviously, fishery exports and economic groWth have a relationship. However, it is not clear that how Vietnam's economic growth over the decade had been affected by sectoral exports like fisheries. In literature, effect of sectoral exports on economic growth had been documented by Awokuse (2003) for Canada case, Anh (2008) for Vietnam case, and Thompson (2009) for Greece case. 1.5. Research hypothesis The hypotheses for this research, therefore, include: 1. A causality relationship between the fishery export and economic growth. 2. Effects of fishery exports on the economic growth in the duration of 1997-2008 1.6. Methodology and data collection Because time series data of socio economic data is usually non-stationary in its level value, it is necessary for the research to check the stationarity of the variables in the first step. The aim of this step is to verify whether the series had a stationary trend, and if it is non-stationary, orders of integration need to be established. To check the stationarity, all the variables are firstly examined through graphical inspection of their time series plots. All the series are then transformed into logarithms and rates of growth of all the variables are approximated by first differences of the logarithms of the corresponding variable value of quarters of years in the period. The Dickey-Fuller (DF) and the augmented Dickey-Fuller (ADF) tests are applied for testing the level of integration of the variables. These tests are to determine whether the variables follow a stationary trend. If the series are non-stationary, the research can not go further in the use of classical methods of estimation such as OLS because it causes the spurious relationships and thus the results would be meaningless. In case the series are nonstationary around their averages, the traditional suggestion was to differentiate the series because this transformation may lead to stationary in the series. Thus, the research can apply conventional econometrics (Granger and Newbold, 1974). Cointegration test is applied in the fifth step. The test is used to estimate the long-run relationship between the two variables, such as GDP and fishery exports, it is 4 necessary only to estimate a dynamic model, and check whether the residuals from the regression are stationary. Lastly, the research estimates an error correction model after using two-step OLS procedure, which provides information about the short-term dynamic responses of the variables. The method is straightforward and involves regressions using stationary time series. The data used in this study is quarterly and cover the period of 1997:1 to 2008:4. It is obtained from Vietnamese General Statistics Office for values of its GDP, CPI, and labor force. Data of exchange rate, fishery exports is collected from websites of www.oanda.com and www.fistenet.gov.vn, respectively, while CPI values of the US are collected from the website of U.S. Department of Labor, Bureau of Labor Statistics, Washington, D.C. 20212(ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt). The Eviews software will be used for econometric regression in this research. This software is a widely used econometrics program, so it can provide more efficient and reliable results. 1.7. The structure of the thesis The thesis includes five chapters: Chapter 1 - Introduction Chapter 2- Literature review Chapter 3 - Methodology Chapter 4 - Results and discussions Chapter 5 - Conclusions and suggestions Chapter two reviews some theoretical frameworks of growth and trade. Throughout these this paper will clarify why sectoral export is very important for economic growth, especially, fishery exports. In addition, the chapter also analyzes some related empirical research extracting the relationship between sectoral export and economic growth. Chapter three introduces models based on these the model specifications of this study will be built, together with data sources and some treatments as well as calculations of data. Chapter four is the most important part, in which empirical results will be presented through descriptive analysis and econometric analysis Chapter five concerns conclusions and from these try to point out suggestions that will help fishery exports grow in quantity and quality sides; 5 Chapter 2. LITERATURE REVIEW 2.1. The relationship between economic growth and trade The relationship between economic growth and trade was focused by many economists when trade comes into being. With the development of trade, it has been the debate of academic economic research because of its impact on economic growth. The emergence of trade and its development, to a certain extent, were closely related with economic growth. In a way, trade indeed promotes economic growth of a country: According to theory, there are links between trade and economic growth and these were discussed for over two centuries. But, controversy still persists regarding their real effects. Adam Smith with the classical school thought can be traced as the initial wave of favorable arguments with respect to trade. Next, this work was subsequently enriched by David Ricardo with comparative advantage, Torrens, James Mill and John Stuart Mill in the first part of the nineteenth century. They believed that trade promoted economic growth in two ways or trade improved the optimal distribution of resources and productivity consequentially and then stimulated the economic growth; on the other hand, one country could gain raw materials and equipments which it could not produce. Those provided the material basis for economic development. These theories interpreted the relationship in some respects but ignored that the international environment is complex and ruleless. Since then, the justification for free trade and the various and indisputable benefits that international specialization brings to the productivity of nations have been widely discussed and are well documented in the economic literature (Bhagwati, 1978; Krueger, 1978). Next, Lewis as the representative of the structural school developed the dual economy model theory. For this theory, a developing economy is parted into capitalist part (the industry sector) and non-capitalist part (the traditional agricultural sector). The capitalist sector was bound to promote the growth of the economy through absorbing and accumulating surplus labor from non-capitalist sector. If the capitalist part produced the exporting goods and the traditional part produced the importing goods, trade would undoubtedly expand the market and demand of products in capitalist part and reduce the wages of labor. Then it would further increase the profit and accumulation of the part and promote economic growth (Chen, 2009). 6 In addition, Corden (1972) with his theory of trade protection represented for the effect school. Corden recognized that trade of a country would affect macroeconomic side from 5 aspects: the revenue effect, the effect of capital accumulation, the substitution effect, the income distribution effect and the effect of the weighted elements. This means that the impact of trade on economic growth was strengthened gradually as the development of economy with cumulation of the above effects. Lastly, the work of Romer (1986) and Lucas (1988) began a new wave of research on economic growth, and it was called endogenous growth theory. The endogenous growth theory proposed a variety channels through which steady-state growth is reached endogenously. This theory pointed out that the growth of developed countries would be attributed to the improvement of productivity. Based on this fact, the theory made a series of models to study the relationship among international trade, technological progress and economic growth. These models have focused on different variables, such as degree of openness, real exchange rate, tariffs, terms of trade and export performance, to verify the hypothesis that open economies grow more rapidly than those are closed (Edwards, 1998). They viewed that trade could promote economic growth through technology spillover and external stimulation. The owners of advanced technologies, whether they had intention or no intention, would gradually make other countries learn these technologies through trade. Trade gives more frequent exchange of information and increased competition, which forced every country to develop new technologies and products. The mutual promotion relations between trade and technical change could ensure a long-term economic growth. Moreover, although the theoretical literature has frequently focused on the relationship between trade and economic growth, the interesting phenomenon is that 'empirical examinations have typically examined the relationship between exports and growth' (Levine and Renelt, 1992, p.953). Besides, the role of export performance in the economic growth process was examined in studies in the late 1960s. In these studies, total exports were pointed out that there are direct or indirect effects to output via some elements. Definitely, these studies were based on things which trade theorists originally conceived of a national economy and national markets. 7 2.2. Theoretical and empirical backgrounds of sectoral exports In reality, somewhere on the periphery of things, there were also some industries enjoying an international comparative advantage, recently. That sector could produce world class commodities for a modest export sector. This sector communicated and traded with buyers in other countries. Now the national economy has gone far down the path of integration with other countries through trade markets. There is no single, peripheral trade sector. Trade sectors intermingle extensively with all the other sectors of the national economy. Markets are not national, they are global. The modem theory of trade has been designed as well as proponed by Paul Krugman, the leader in this school. Therefore, trade trend of countries, today, are try to develop key industry for export in order to get gain or economic growth. In other hand, this trend is also called sectoral export. Obviously, sectoral exporting is economic development strategy of many countries. Tourism service exports in Greece are an example. Greece, with its thousands-year culture and birthplace of philosophy, is famous tourist hotspots include the capital Athens, the northern Chalkidiki peninsula, the Ionian island of Corfu and the island resorts of Myconos, Santorini, Paros and Crete. For these reasons, Greece is one of the best places in tourism and an important percentage of the country's income comes from tourism. Thompson (2009) studied effects of the exchange rate and Euro switch on tourism revenue in Greece. This paper indicated the Euro switch had a large positive impact on Greek tourism revenue, and tourism revenue should increase as more countries adopt the Euro currency. In addition, strategic devaluation of a fixed exchange rate is ill advised, and appreciation of a flexible exchange rate may raise tourism revenue as in Greece. Otherwise, the Philippines is the paradigmatic example of a state that deliberat ely constructed state policy for its exports of workers abroad. Yang (2004), in an important household survey, has demonstrated that Philippine families with migrant members abroad fared considerably better than family member without migrants. 8 Table 2.1 Estimate of Overseas Filipino Workers (December 2004) Region Permanent Africa South and East Temporary Irregular Total 318 58,369 17,141 75,828 91,901 1,005,609 443,343 1,540,853 2,312 1,449,031 112,750 1,564,093 174,387 506,997 143,035 824,419 2,689,722 292,892 549,725 3,532,339 228,946 57,357 30,978 317,281 Asia Middle East Europe Americas Oceania Sea-based World total 229,002 . 3,187,586 3,599,257 229,002 1,296,972 8,083,815 Source: Yang (2004) According to data from Commission on Filipinos Overseas, Philippine Department of Foreign Affairs and Central Bank of the Philippines, there are some figures as follows: -Population of Philippines (2004): 84.6 million -Value of Remittances (2004): $ 8.6 Billion - GDP of the Philippines (2004): $85.1 Billion The numbers here are striking. Out of a total population of 84 million, approximately 8.1 million are working abroad roughly one in ten Filipinos. The other striking figure is the seven billion dollars of remittance income generated by these workers, or roughly 10% of the Gross Domestic Product (GDP) of the Philippines. This means that the Philippines have succeeded in developing a large scale labor export regime that provides significant level of remittances to the Philippine economy. In addition to the unrequited nature of remittance transfers, remittances are seen as a particularly stable form of external finance (Ratha, 2003; Kapur, 2004), and can even increase during a crisis. The logic is simple enough so that the Philippines try to keep labor exports as more as possible. Besides, China is a giant in fishery exports as well as the largest Asian fish harvester, landing over 41 million tones from capture fisheries and aquaculture in 9 2000. Years Source: FAO Fishery Statistics, Aquaculture production Figure 2.1 Reported aquaculture production in China (from 1950) In 2003, China registered a total amount of 30.28 million tones of farmed fish, accounting for 64.34 percent of national fishery production (FAO, China fishery). Exports of farmed shrimp, eel, tilapia, shellfish and seaweed have also formed the backbone of Chinese seafood exports, accounting for about 50 percent of national seafood exports in terms of value. The rapid development of aquaculture in China has not only contributed to improved food supply, but has also generated employment and income to the Chinese people. About 4.3 million rural workers are directly employed in aquaculture with an annual per capita net income of 8,667 Yuan from 1985 to 2003 (FAO, China fishery) As the result, sectoral export is very important for developing countries, it can help these countries to grow and develop. Vietnam is a developing country and also one of members of WTO. Then, sectoral export is focused as strategy. Thus, this thesis similarly chose fishery exports as sectoral exports in Vietnam for study. 10 2.3. Why fishery sector was chosen for this study? Over the course of two decades, Vietnam has emerged as an important regional producer of oil and natural gas in Southeast Asia. The country has boosted exploration activities, allowed greater foreign company involvement in the oil and natural gas sectors, and introduced market reforms aimed at strengthening Vietnam's energy industry. While these efforts have helped Vietnam expand production of oil and natural gas, domestic consumption of these resources has also increased as a result of rapid economic growth. Half of Vietnam's domestic energy consumption comes from oil, with hydropower (20 percent), coal (18 percent), and natural gas (12 percent) supplying the remainder. Therefore, net exports of crude oil in Vietnam are not much in future. The below graph is demonstrated this thing. Vietnam's Oil Production and Consum1)tion, 1998-2008* 450 Production 400 ;:., ~ 350 £ 300 VI ~ 250 .,=200 ('; ~ 150 ..c0 100 1- 50 0+-~~~-r~~~--~~~~~-r~~~--~+-~ 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Year Source: EIA International Energy Annual 2004; Short-Term Energy Outlook (June 2007) *2006 is estimate; 2007-2008 are forecasts Figure 2.2 Vietnam's Oil Production and Consumption, 1998- 2008* In addition, crude oil, though, is the first important export sector in Vietnam and its contribution percentage or· rate on GDP is largest. Crude oil is a primary product, and is exploited from natural resources. Crude oil will be rapid exhaustion time by time, so it is not potential export sector in further future. Further, crude oil export does not impulse development of processing technology as well as employs products from other industries, and does not create more employment. Last, crude oil production of Vietnam is not much, the production level is low than that of other countries in the zone. 11 TOl) Asia-P,lcific Oil Producers, 2006'· China 1---------------· ·-·"''...;.;."'r:...;:.;''•:"""\W'.=.""' ,...,........ ~--'''? ~ -·-; ~ .... ~--'" - '--"' '~ 3,836 -=.. 1,100 Indonesia 1 - - - - - - - .. India t----"""'"'"""._, 847 Malaysia 1----__;,:- - Xem thêm -