Endogenous protection, market structure and employment in Vietnam

. Endogenous Protection, Market Structure and Employment in Vietnam 1

International Area Review, Vol.12, No.1, June 2011

Endogenous Protection, Market Structure and Employment in Vietnam

Tran N. Kien*

*

Ph.D./Faculty of Economics, Thai Nguyen University of Economics and Business Administration, Vietnam

Abstract

This article examines the validity of endogenous protection theory in Vietnam. Imports and

trade protection are simultaneously modeled using the two–stage least square estimator. The

study also employed an up–to–date panel dataset that was recently made available in Vietnam,

which allowed us to measure the dynamic interactions among trade flows, industry

characteristics, and trade protection. The results of this paper showed that tariffs are frequently

high in industries with a small number of firms, large employment size, low import

penetration, low industry growth rate, and less capital stock. In general, the findings of this

study provide further evidence favoring the endogenous trade theory. This case study of

Vietnam may, therefore, greatly contribute to our current understanding of the political

economy of protection in developing countries.

Key words: Tariff, Endogenous Protection, Vietnam, Market Concentration, Employment