Changes of Export Sophistication and its Determinants: The Case of Vietnam

Purpose This paper investigates changes in Vietnamese export sophistication during the period of 2005 to 2017 using the HS 6-digit trade data of 115 countries. Design/Methodology/Approach We first analyze how the export sophistication performed using data covering the period from 2005 to 2017;distinguishing the performance of Vietnam from other countries in the ASEAN region and with countries that have an equivalent income level;as well as between advanced and developing countries. Second;we conduct an empirical analysis on the determinants of export sophistication using the HS 6-digit dataset for 115 countries. Findings We found that Vietnam’s export sophistication has increased over time;and in particular;the export sophistication of the top 10 largest export products has increased faster;which implies that Vietnam’s export structure has changed to higher-quality products. Among ASEAN countries;Vietnam’s export sophistication was similar to that of low-income countries in 2005;but became similar to that of high-income countries over time. The regression results show that GDP per capita is strongly correlated with export sophistication;and that the quality of institutions;trade openness;population size;and land area also affect export quality. Research Implications Regression results show that Vietnam’s export sophistication is different from that of high-income countries;but is not different from that of other developing countries.