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The Role of Logistics in Improving Vietnam’s Export Efficiency
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Abstract
This paper studies the impacts of logistics performance on Vietnam’s export efficiency, using the stochastic frontier gravity model (SFGM). While the existing literature focused on the relationship between logistics and exports from a cost-reduction perspective, this paper scrutinizes the efficiency perspective of international trade. The analysis utilizes bilateral export data between Vietnam and its trading partners from 2005 to 2022. Greene’s True Random Effects (TRE) and True Fixed Effects (TFE) estimators are applied within the SFGM framework to address unobserved, time-invariant heterogeneity among trading pairs between Vietnam and its partners while enabling export efficiency to temporally change. The results show that both Vietnam’s and partners’ logistics performances significantly and positively affect export efficiency, diminishing the gap between actual bilateral export turnovers and the corresponding potential levels. The effect of Vietnam’s logistics performance is higher than that of its trading partners, indicating the greater importance of export logistics capabilities. These results indicate the crucial role of logistics in reducing “behind the border” constraints and provide a new insight into the logistics-trade relationship. The robustness of the findings is confirmed using instrumental variables regression. The policy implications include the necessity of consistent investments and improvements in logistics performance to overcome implicit trade barriers, further unlock Vietnam’s export potential, and facilitate its competitiveness in the international markets
Keywords
Export efficiency, logistics performance, stochastic frontier gravity model, true fixed effects, true random effects, Vietnam
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References
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