Vietnam-Japan Economic Partnership Agreement (VJEPA) - An analysis of trade diversion effects
Abstract
This research estimates the impact of the Vietnam-Japan Economic
Partnership Agreement (VJEPA) on bilateral trade flow between Vietnam and Japan.
The study estimated an augmented gravity model using panel data method in order to
quantify the trade creation and trade diversion effects of the agreement. The sample
includes 80 common import partners of Vietnam and 80 common import partners of
Japan during the period from 2005 to 2013. The study used Feasible Generalized
Least Square (FGLS) to run regression for the gravity model. The results indicate that
the VJEPA has had trade creation effects, with little evidence to suggest it is caused
by the expense of trade diversion.