Journal of Applied Finance & Banking

Analysis of the Determinants of Trade Balance: A Case Study of Vietnam

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• Abstract

   

  The study is focusing on the analysis of the determinants of trade balance in Vietnam. Vietnam has greatly expanded a large volume of exports and imports in recent years whereby Vietnam has a very high degree of trade openness. Using the sample and the secondary data covering the period of 2005 – 2018 and collecting from General Statistics Office, the State Bank of Vietnam, publications and other Vietnamese data with the theoretical framework of trade balance, the study finds that foreign direct investment had a significant and negative effect on trade balance. This result reflects that increase in FDI may worsen trade balance. The openness of the economy has a significant and negative effect on the trade balance. Finally, the exchange rate has insignificantly contributed to the change of trade balance.

   

  Keywords: trade balance, exports, imports, FDI, and exchange rate