Trading volume

1. Theory
a. Trading volume
Trading volume refers to the total quantity or value of goods and services exchanged between
countries or regions over a specific period of time. It is a measure of the extent of international
trade and represents the magnitude of economic transactions between nations.
In other hand, trading volumes is affected by some factors such as external factors, infrastructure
and geographic location or resource and technology; and especially trade policies ( Heckscher-
Ohlin theorem, tariffs and non-tariffs measures)
b. Theoretical basis for development
 The Heckscher-Ohlin theorem states that the primary cause of the presence and division
of labor in international trade is variations in resource structures among nations. The
following fundamental presumptions form the basis of this theorem:
There are variations in resources: Resources such as labor, capital, and natural resources
might vary throughout countries. Globally, these resources are not dispersed equally.
Relative efficiency: In certain industrial sectors, nations are able to employ their
resources rather effectively. That is, a given resource may be used more effectively by
one nation than by another to create a given good.
Trade can occur between two countries that have diverse resource structures and use them
pretty efficiently. Every nation will import goods that utilize resources from other nations
more efficiently and export goods that use its own resources rather efficiently.
In the case of Vietnam, the Heckscher-Ohlin theorem can be applied as follows labor and
land. In case of labors, Vietnam has a large population, and labor is a crucial resource.
With a relatively low-cost workforce and moderate technical skills, Vietnam has
favorable conditions for exporting labor-intensive goods such as clothing, footwear,
electronics, and industrial products. Besides, Vietnam has a vast land area with suitable
agricultural regions, which facilitates to specializing agricutural goods.

 A tariff is a tax or duty levied on the traded commodity as it crosses a national boundary.
Tariff is the most important type of trade restrictions in most national trade policy. In
fact, a small country imposed tariff in order to protect domestic industry, gain revenue,
control market or impose trade policy. Beside, the welfare of the small country always
decreases when trade volume decreases while trade terms stay the same.
In other hand, non-tariff refers to measures or barriers imposed by a country on imported
goods or services that are not in the form of a traditional tariff or import tax. These non-
tariff measures are regulatory or policy measures that can affect international trade. Some
non-tariff measures contain import quotas, voluntary export restraints, dumping, export
subsidies…
 However, as a small nation who wanted to stably promote economy, especially in the
volume of trade, Vietnam signed Free Trade Agreements for a better development. With a
FTA, countries will proceed along a roadmap to reduce or eliminate tariff and non-tariff
barriers towards establishing a free trade area. Therefore, tariff or non-tariff could be
called old-measures, and are not accordant enough for world economic situation today;
while FTAs help increase trading volume significantly.
2. Actual data and analysis
a. Export turnovers

Export turnovers of Vietnam (Billion USD)

400
371
355
350 336

300 282
264
250 243
214
200 176
162
150
150 132

100

50

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Export turnovers

(source: Vietnam General Statistics Office)

It is evident that Vietnam's export revenue increased steadily from 132 to 371 billion USD
between 2013 and 2022. Put another way, at that time, Vietnam's trade volume increased steadily.
On the other hand, the export turnover curve's slope indicates that there are three significant
phases in the chart: 2013–2016, 2016–2020, and 2020–2022.
2013-2016: Vietnam is putting the industrialization and modernization strategy into practice
between 2013 and 2016. Conversely, Vietnam, which recently attained low-middle income
status, has ratified ten free trade agreements, comprising AKFTA, AJCEP, VJEPA, AIFTA,
AANZFTA, VCFTA, VKFTA, and VN-EAEU FTA. In actuality, trade volume will rise
dramatically with the signature of free trade agreements since tariff and non-tariff barriers will be
substantially eliminated. In actuality, however, trade volume increased by only 33%, or $44
billion, between 2013 and 2016. Stated differently, the average annual growth in trade volume
was 8.2%. Based on the Heckscher-Ohlin theorem, Vietnam at the time was still a labor-intensive
nation, which helps to explain the dilemma. In other words, Vietnam is mostly self-sufficient and
only exports goods—like textiles, shoes, handicrafts, and agricultural products—that have been
funded by foreign capital. It takes time for Vietnam to draw in foreign investment capital, which
raises capital and products output while also changing the composition of the output.
2016-2020: Vietnam is currently a member of the CPTPP and EVFTA, two further free trade
agreements. These are significant deals that not only open up new markets but also target
important ones with enormous untapped potential. As a result, export revenue climbed
dramatically—by over 60%, or 106 billion USD. Actually, during this time Vietnam became
more capital intensive and received more investment funds from overseas. Electronics, computer
components, and televisions have emerged as important export goods. Consequently, a rise in
trade volume is unavoidable.
2020-2022: At this point, the COVID-19 pandemic is being fought globally. The government's
effective control of epidemics ensures that production capacity is guaranteed. However, Vietnam
has signed two significant free trade agreements, the UKVFTA and the RCEP, which have made
exporting extremely favorable even if isolated nations are rare. During the dry spell, export
revenue rose by almost 31%, or USD 89 billion. That's not a bad figure given that countries are
dealing with trade slowdown during the pandemic. That is still due to appropriate policy, which
directs the export of important goods to prospective markets.
2023: A minor deceleration occurred as the value of imports fell by almost 4%, or 16 billion
USD. The global economy still faces numerous challenges. The rate of inflation has decreased,
but it is still high. Global trade and investment are continuing to decline; many major economies
maintain strict monetary policies; the demand for commodities globally and in some of
Vietnam's primary export markets, including the US, China, EU, ASEAN, and Japan, has
decreased; and many countries have slowed down their growth as a result of increased trade
defenses and protection barriers.
b. Import
 Import turnovers of Vietnam (Billion USD)
400
358
350 332 327

300
253 262
250 237
211
200
165
148 147
150 132

100

50

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Import turnovers

(source: Vietnam General Statistics Office)

As can be observed, the import turnover chart, which shows growth from 132 billion USD to 371
billion USD between 2013 and 2022, is somewhat similar to the export turnover chart. The
import turnover in 2023 is only 355 billion USD, which is a minor decrease.
Prior to the COVID-19 pandemic, imports increased by an average of 12.5% year, or almost
twice as much. Although this is a sizable figure, it also aligns with the labor market's demand for
commodities. Products have changed, moving from leather and textiles to computers and
electronic parts. Furthermore, Vietnam's export markets are sizable due to its signing of free
trade agreements with China, Japan, and Korea in the past.
Similar to exports, Vietnam is managing production operations in addition to combating the
COVID-19 outbreak. In 2021 and 2022, respectively, the value of imported goods is expected to
reach 336 billion and 371 billion USD. One may argue that free trade agreements save the world
during hard times, as they guarantee input supplies for industry and benefit a developing nation
like Vietnam.
3. Conclusion
Overall, Vietnam's imports and exports performed well, consistently exceeding the
predetermined goals. The unavoidable result of this is a high level of constant growth in trade
volume. Over the past ten years, export turnover has consistently increased as a result of a focus
on exporting essential products that are appropriate while also evolving and adapting to each
time. The proper practical implementation of the Heckscher-Ohlin theorem is at the heart of this
issue. However, the elimination of non-tariff and tariff obstacles also fosters favorable conditions
for a rise in trade volume. Vietnam's high export and import turnover provides the strongest
indication yet that the country's trade volume over the last ten years has been very good.