Growth in International Commodity Prices, the Terms of Trade, and GDP Per Capita: A Case Study of Vietnam

25 Pages Posted: 2 Sep 2016

See all articles by Markus Brueckner

Markus Brueckner

The Australian National University

Kien Nguyen

Da Nang University of Economics

Date Written: August 31, 2016

Abstract

The Vietnamese economy is characterized by a high degree of international trade openness and a relatively low GDP share of net-exports. This paper examines the effect of growth in the terms of trade, and more specifically, in international commodity prices, on Vietnam's GDP per capita growth. The paper finds that, during 2000-2014, growth in the terms of trade contributed positively to Vietnam’s GDP per capita growth but the effect is not large: less than one-tenth of Vietnam’s GDP per capita growth was due to growth in its terms of trade. The paper argues that the relatively small effect of growth in the terms of trade on GDP per capita growth is due to a low GDP share of net-exports. Econometric model estimates show that transitional convergence accounted for about half of Vietnam's GDP per capita growth during 2000-2014.

Suggested Citation

Brueckner, Markus and Nguyen, Kien, Growth in International Commodity Prices, the Terms of Trade, and GDP Per Capita: A Case Study of Vietnam (August 31, 2016). CAMA Working Paper No. 54/2016 . Available at SSRN: https://ssrn.com/abstract=2833067 or http://dx.doi.org/10.2139/ssrn.2833067

Markus Brueckner (Contact Author)

The Australian National University ( email )

Canberra, Australian Capital Territory 2601
Australia

Kien Nguyen

Da Nang University of Economics ( email )

71 Ngũ Hành Sơn, Mỹ An, Ngũ Hành Sơn, Đà Nẵng
Vietnam

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