The Impact of Geographical Location to Vietnam's International Trade

The advantages of using gravity approach for modeling transition processes in foreign trade are the ability of gravity models to explain international trade pattern under the conditions of comparatively little amount of data and validity of theoretical background of the model to the economies in transition. We have estimated the gravity model of trade (sum of exports and imports), the gravity model of export and the gravity model of import. This paper examines the influence of Vietnam with favorable geographical. Our results show that the favorable geography of Vietnam helps this country can expand and support their trade. However, the trade freedom will be prevent expand their trade. This paper also discusses relevant policy implications.