Vietnam: Humble Beginnings, Brighter Future

It was inconceivable that Vietnam could ever catch up to the rest of the world’s major economic players. From being ravaged by war and post war conditions such as government collectivization of land and businesses, the country has made tremendous efforts to recovery. Through implementation of privatization, direct foreign investment, and deregulation, economic activity continues to rise. The country resumes preparing for international integration by educating its workforce and through investments in manufacturing technologies and infrastructure. Vietnam has positioned itself as a vital partner in the global marketplace. Its ability to produce low cost manufacturing yet high quality products has attracted companies from all over the world and will ever increase. As a member of the ASEAN Free Trade Area and the World Trade Organization, Vietnam reaffirms its commitment to economic liberalization. According to the Ministry of Foreign Affairs, this country’s GDP increased by a staggering 7.2% in 2005. At this remarkable rate, Vietnam has the potential to emerge as the world’s top outsource destinations.

By Trisha Le, Research Intern for GLOBAL ID, LLC.
www.identifyglobal.com

Regional Economic Integration

Regional Trade Agreements (RTA) were developed following the rise of Bilateral Agreements. RTAs are trade agreements that involve two or more countries confined to a common region. Countries in close proximity tend to form trade agreements because of similar consumer tastes and shorter travel distance. Two types of RTAs are Free Trade Agreements and the Customs Union. As regional economic integration reduces trade barriers; producing static and dynamic effects.

Static effects are efficiencies that are formed through trade creation and diversion. In trade creation, barriers are broken down and production becomes more efficient because of comparative advantage. Trade diversion occurs because trade shifts to the countries that are members of the RTA, even if non-member countries are more efficient with no trade barriers. Dynamic effects occur when the overall size of the market increases due to the elimination of trade restrictions. When RTAs are established, and trade barriers between the countries are eliminated, the size of the market for a particular company grows from its home country to include all of the RTA member countries.

For additional information, contact Carl Phelps, Research Associate of GLOBAL ID, LLC. – a Management Consulting and International Market Research Company. http://www.identifyglobal.com/ (720) 334-6982