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2 The ASEAN countries’ agricultural trade patterns

2 The ASEAN countries’ agricultural trade patterns

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wood sectors, and fishery sectors such as rice, natural rubber, spices, fixed vegetable

fats and oils, wood in chips, fuel wood, fish, and crustaceans.

The dynamics analysis by OLS regression indicates that these countries, generally,

have the convergent patterns in agricultural competitiveness except for Indonesia,

Cambodia, and Brunei. Indonesia has divergent or unidentified patterns of agricultural

competitiveness while the agricultural competitiveness patterns of Brunei and Cambodia

are not clear due to the unavailability of the full data. The dynamics analysis by Markov

matrix shows that Brunei, Cambodia, and Singapore have the highest mobility or strong

changes of agricultural competitiveness indicators; Vietnam and Philippines have the

relatively high stabilities or unchanges of agricultural competitiveness; while Malaysia,

Thailand, and Indonesia obtain the highest stability and the lowest mobility of

agricultural competitiveness. In general, the ASEAN countries successfully maintain the

rankings of the agricultural competitiveness over time.

The results by the TCI, generally, imply that the ASEAN countries are weakly

complementary or strongly competing in the agricultural trade on the world markets. In

other words, the agricultural export patterns of the ASEAN countries weakly match the

agricultural import patterns of the partner countries in the ASEAN region in comparison

with the agricultural commodity composition of the word trade. In addition, the falling

trend of the mean TCI values shows that the agricultural complementarity degree of the

ASEAN countries slightly decreases over the period 1997-2015. In other words, the

ASEAN countries are becoming less complementary or more competing.

The results by the ESI, however, show the low degree of similarity in the agricultural

export patterns of the ASEAN countries with the mean ESI value of 2.8. This means

that these countries are relatively complementary in exporting the agricultural products

to the world market. The different result between the TCI and the ESI indicates that the

ASEAN countries are not complementary in matching their partners’ agricultural import

demand while they are complementary in supplying agricultural products to the world



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markets. In other words, the countries will obtain more benefit from exporting their

agricultural products to the world markets rather than exporting to the ASEAN regional

markets. The growing trend of the mean ESI values shows that these countries are

becoming more competing on the world market.

Spearman’s correlation coefficients for the competitiveness indicators, in general,

show that the ASEAN countries’ agricultural competitiveness patterns are relatively

substitutable or competing on the world markets. Singapore-Thailand, Brunei-Vietnam,

and Brunei-Thailand are the most complementary pairs of countries whilst IndonesiaPhilippines, Indonesia-Malaysia, and Thailand-Vietnam the most substitutable pairs in

the agricultural trade competitiveness patterns.

In conclusion, though Vietnam has relatively strong competitiveness in agriculture it

is facing hard competitions from the regional countries such as Thailand and Indonesia

in both domestic and global markets. These competitions or substitutability in

agriculture seem to be increase over time. Therefore, the country should utilize its

strong competitive agricultural commodities such as wood in chips, spices, rice, natural

rubber, coffee, crustaceans, and fish to develop its market shares in the local and

regional markets. Moreover, Vietnam needs to enhance and take advantage of the

international economic relationships such as APEC, WTO, TPP-CPTPP, the ASEAN’s

relationships with India, Australia, China and bilateral trade agreements with United

States, Japan, Chile, Korea, Eurasian Economic Union, and European Communities to

expand its market shares on the world markets.

7.3 Competitiveness of alternative agricultural production systems in Ben Tre

It is practically significant to identify the comparative advantages of competing

crops and theoretically original to compare the different competitiveness approaches.

This thesis fills in the research gap by assessing the alternative agricultural production

systems by the economics and production indicators in the case of Ben Tre. This case

study is an application of a policy analysis matrix to investigate the competitiveness of



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the three alternative crops of rice, coconut, and pomelo in the general arable lands of

Ben Tre province of Vietnam. The results, in general, indicate that pomelo achieves the

strongest comparative advantage with the PCR of 0.16, the DRC of 0.13, and the SCB

of 0.15, coconut obtains the medium comparative advantage the PCR of 0.53 and the

DRC of 0.38, and the SCB of 0.42 while rice has the weakest comparative advantage

with the PCR of 0.92, the DRC of 0.63, and the SCB of 0.71.

The rice, coconut, and pomelo are not, generally, supported or protected by the

government with the NPCO values of 0.72, 0.59, and 0.69, respectively. These

agricultural production systems may obtain, however, the subsidy by the government

with the NPCI values of 0.85 for rice, 0.85 for coconut, and 0.86 for pomelo. The EPC

and PC values of rice, coconut, and pomelo are smaller than the unity and the results

indicate the net disincentives of the government for the rice, coconut, and pomelo

production systems. The study, moreover, confirms the overall transfers from the private

producers of rice, coconut, and pomelo sectors to the general society with the SRP

values of -0.25, -0.33, and -0.29, respectively. Especially, the social profit indicators are

higher than the private profit indicators. It means that the society obtains more benefits

from these agricultural production activities than the private actors. This result seems to

be different from the other countries, especially in OECD countries.

The thesis, moreover, analyzes the sensitivity of the PAM indicators to understand

the dynamics of the comparative advantages of these crops by three scenarios. First, in

the case of the climate change of the drought and salinity intrusion in 2016 which cause

the yield reductions of rice and pomelo sectors while it slightly improves the

productivity of coconut sector. The result shows that it makes rice become nonprofitable at the market price while the sector is still weakly competitive at the social

price. The PAM indicators of coconut and pomelo seem to be changed insignificantly.

Second, if the rice, coconut, and pomelo private producers have to pay the water and

land charges the private rice producer will get loss while coconut and pomelo producers



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still obtain profit. The payments of the water and land charges to the government do not

impact on the PAM indicators at social prices. Finally, the sensitivity of the PAM

indicators to the assuming changes of output prices, fertilizer prices, land rent prices,

production productivity, and the real effective exchange rate by the scope of ±5, ±10,

±15 and ±20 percent. The results, generally, show that rice output price and productivity

decreases make the private producers get lost at the point of 10 percent only. All other

comparative advantage indicators at the private and social prices are stable in nature or

still in the interval {0, 1} with the assuming changes of the variables by that scope.

In conclusion, rice is the weakest competitive and the most sensitive production

system to the changes in the climate and other market and policy conditions. Pomelo is

the strongest competitive and definitely stable production system to the changes of

market and policy conditions. Pomelo is, however, potential to be relatively impacted by

the climate change. Coconut is the medium competitive sector and relatively stable

production system to the changes in climate, market and policy conditions. Pomelo

results in the greatest private and social profits while coconut can generate a potential

coconut processing cluster with stable private and social profits. The results suggest that

rice arable land should be transferred into pomelo and coconut crops to achieve more

effective and sustainable results for private producer and society. However, the crop

transferring cost should be taken into account due to the big initial investments of

pomelo and coconut and the crop’s adaptations to the natural conditions.

This thesis, however, has empirical limitations to identify the determinants or factors

of the agricultural competitiveness by using the econometric approach. The main

reasons are (i) the unavailability of data and variables at the sector level, namely at 3digit level in SITC Rev. 3. The national variables seem to not work for this regression

model; (ii) the main objective of this thesis is to investigate and compare the agricultural

competitiveness by the cross-sections analysis and the cross-countries analysis.

Therefore, the future research should try to identify the factors of the agricultural



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competitiveness in Vietnam in particular or in the many countries in general. The thesis

is also limited to using two methods of many approaches. Thus the future researches

need to employ and compare other frameworks of measuring competitiveness to

understand the different sides of agricultural competitiveness of Vietnam.

7.4 Theoretical analysis and conclusion

The literature review concludes that there are various approaches to investigate the

competitiveness according to six main disciplines such as: (i) the economic and

production indicators; (ii) the trade performance indices; (iii) the determinants of

competitiveness; (iv) the multidimensional frameworks; (v) the value chain performance

approaches; and (vi) the benchmarking. In this thesis, the authors will employ the first

and second approaches to achieve the research objectives. This thesis contributes to the

economic literature by providing the evidences and discussions of the consistency of the

trade indices in cases of Vietnam and the ASEAN countries and the comparison of trade

and economic approaches in case of Ben Tre province.

The consistency tests between the competitiveness indices of the RCA, the RTA, and

the NRCA in cases of Vietnam by cross-sections and the ASEAN countries by crosscountries over the period 1997-2015 show that these trade indices are strongly

consistent as cardinal measures and dichotomous measures while they are weakly

consistent as ordinal measures. The RCA and the NRCA are perfectly consistent as

dichotomous measures due to the derivation of the NRCA from the neutral-point of the

RCA whilst they are the weakest consistent as ordinal measures. In other words, the

trade indices are strongly consistent in identifying the degrees of the agricultural

competitiveness and determining whether a country obtains the competitiveness in an

agricultural sector while they are weakly consistent in ranking the competitiveness.

The PAM model consists of various indicators such as the PP, the PCR, the SP, the

DRC, the SCB, the NPC, the EPC, the PC, and the SRP to assess the comparative

advantages, the efficiency of agricultural production systems and the impacts of market



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failures and policy on agricultural production activities. The results show that the PAM

indicators seem to be inconsistent and contrary to the trade performance indices (the

RCA, the RTA, and the NRCA for these sectors of Vietnam) in the case study of Ben

Tre province for rice, coconut, and pomelo production systems. The potential

explanation is that the PAM indicators identify the social benefits and welfare. They are,

therefore, dependent on the output prices positively and the supply quantity negatively.

In other words, the higher output prices and less supply quantity may result in the

stronger competitiveness by the PAM indicators. On the other hand, the trade

performance indices measure the relative market shares and they are dependent on the

output prices negatively and the supply quantity positively. Thus, the higher output

prices and less supply quantity may result in the weaker competitiveness by the trade

performance indices. The PAM and trade performance approaches, in conclusion,

investigate the different perspectives of competitiveness based on the data sources, the

research and policy objectives and conditions. The PAM indicators employ the

production data to measure the comparative advantages of the agricultural production

systems based on the high output prices, high value-added, and low input costs to

generate the higher private and social profitability and welfare. On the other hand, the

trade performance indices use the revealed trade data to assess the comparative

advantages of the agricultural trade flows based the large export quantity, relative high

market shares, and low prices to improve the private and social profitability and welfare.

This result is, however, limited in the scope of three sectors in one province in one

year to make the conclusion of the negative relationship between the PAM indicators

and the trade performance indices due to the limited data. Thus, the future research

should expand the scope of empirical research to identify the relationship between these

approaches if the necessary data is available. Moreover, it is worth noting that the PAM

and the trade based measures mainly focus on the outcomes of competitiveness only and

are not completely good at capturing the key competitiveness issues in an agricultural



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system or value chain. In other words, these approaches fail to provide the

understanding the natures or sources of these outcomes, to identify the determinants or

factors of the results, and to recognize the any bottlenecks or problems occurring in the

supply chain to improve the competitiveness. Thus the future research which may

provide the empirical studies and the comparison arguments between the approaches of

the economic and production indicators, the trade performance indices, the value chain

performances, benchmarking, and multidimensional models will be practically and

theoretically significant and useful.

7.5 Policy implications

Though achieving the relative comparative advantages from the natural environment,

fertile soil, and abundant water resource, Vietnam’s agricultural sectors face the

problems of domination of small-scale farms, negative impact on the environment,

cultivation land conversion towards urbanization and industrialization, new challenges

from climate changes, increasing input costs, low productivity, the severe competitions,

and demanding markets. The results, in general, indicate that Vietnam’s agricultural

competitiveness pattern and export strategy are based on the primary and naturalresource-intensive agricultural sectors with relatively low private and social

profitability, value-added, and welfare. The agricultural trade competitiveness patterns

are slightly changed and improved with the convergent trends in overall. The main

agricultural sectors have been, however, significantly losing the competitiveness over

time such as rice, crustaceans, fuel wood & wood charcoal, natural rubber, coffee, tea,

and silk. Vietnam obtains the relatively high agricultural competitiveness rankings in

comparison with other countries, especially the ASEAN countries. The ASEAN

countries seem to be relatively substitutable in the world agricultural markets and the

ASEAN countries’ competitions in agriculture tends to increase over time. The thesis,

moreover, assesses the competitiveness of alternative or competing agricultural

production systems in the arable lands to determine the best crops by economic



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indicators. The result shows that rice has the weakest competitiveness, coconut has the

medium competitiveness, and pomelo obtains the strongest competitiveness. Rice is also

strongly sensitive to the changes of input factors and the climate condition. Coconut is

relatively stable to the changes of these factors. Coconut and pomelo, however, require

the big initial investment over 3-5 year period without turnovers and incomes.

Based on the research results, the thesis would suggest the general policy and

strategy implications to sustainably develop the agricultural sectors and improve the

private and social welfare in Vietnam as follows: (i) re-structuring the production and

trade pattern of Vietnam’s agricultural sector; (ii) maintaining the competitiveness

rankings of the key agricultural sectors; (iii) Expanding and enforcing the regional and

global integration; (iv) building the master crop plans; and (v) promoting sustainable

agriculture and adapting to climate changes.

Re-structuring the agricultural production and trade pattern

In general, the primary and natural-resource-intensive agricultural production and

trade pattern may be important and appropriate in the initial period of economic

innovation and industrialization. The dynamics analysis also proves that Vietnam’s

export strategy and comparative advantage pattern is relatively dependent on the

natural-resource-intensive and traditional agricultural sectors such as crop and fishery

sectors over time. Though there are changes in the competitiveness rankings of the

strongest competitive commodities and the convergent pattern in the agricultural

competitiveness over the period 1997-2014 which may be considered as a small

improvement of the export and economic growth pattern, the natural-resource-intensive

and traditional products are the strongest competitive and main agricultural export

sectors of Vietnam. The natural-resource-intensive export strategy should be important

in the initial period of industrialization, economic development, and globalization but

not be appropriate and effective in the medium and long terms. Especially, in the current

process of globalization and modernization with the fierce competition and strict



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demand for food, Vietnam has to re-structure the agricultural production and trade

pattern to the large value-added and high productivity sectors based on the high

technology agricultural and modern management process.

In order to re-structure the agricultural production and trade pattern, the country

should implement the following actions: (i) identifying the potential agricultural

commodities which are preferred by the consumers and suitable for the local natural

conditions based on the economic, social, and environmental indicators; (ii) planning

cultivated areas and transferring other products to these potential sectors with taking

account of the transforming cost and initial investment; (iii) employing high agricultural

technology and international quality standards; (iv) enhancing the horizontal and

vertical linkages in the sector; and (v) promoting the local and export markets.

Maintaining the rankings of strong competitiveness sectors

The empirical results indicate that Vietnam has been losing competitiveness in its

key and strong competitiveness sectors such as rice, crustaceans, tea, rubber, silk, and

coffee. They are the most important sectors with significant contributions to Vietnamese

economy and society. Though Vietnam obtains the significant market shares and trade

competitiveness these commodities incur the low value-added and export price due to

product quality and added-value services such as package, private brand name,

standards, labels, and marketing and promoting activities.

Developing the science, technology, and system management in agriculture are the

significant keys to improve the agricultural product quality and value. The science,

technology, and system management indicators may be measured by the number of

experts, research & development spending, capital and investment for agricultural

science, technology, and system management; share of agricultural production; science

and technology patents; science and technology infrastructures. The result in Chapter 4

shows that Vietnam science and technology indicators are generally lower than

Indonesia, Thailand, Malaysia, and the Philippines. Therefore, Vietnam’s government,



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enterprises, and farmers need to increase the investment and spending in the agricultural

science, technology, and system management.

In conclusion, Vietnam may maintain the competitive advantage degrees and ranks

of these important agricultural sectors by: (i) identifying the key agricultural sectors

with the high quality and strong competitiveness to develop in large scales with the

efficient master plans; (ii) researching, preparing, and producing the good quality seeds

or varieties in the mass scopes; (iii) employing high technology, international quality

standards and production process; (iv) innovating the appearance of agricultural

products, packages, and labels; (v) promoting the private brand names and collective

brand names for these agricultural products; and (vi) researching and applying the

modern and effective processing and preserving science and technology to increase the

agricultural product values.

Expanding and enforcing the regional and global integration

Vietnam is a member of the ASEAN. The region is expanding and enforcing its

cooperation scopes and degrees. The research results in Chapter 6 allow to recommend

that, in order to take advantage of the opportunities in the regional economic integration,

the ASEAN countries with strong agricultural competitiveness need to specialize in and

maintain the competitive advantage degrees and ranks of their important agricultural

sectors such as rice, natural rubber, spices, fixed vegetable fats and oils, wood in chips,

fuel wood, fish, and crustaceans by upgrading product quality standards, improving

production productivities, enhancing the global market linkages, and reducing the input

costs. The countries with weak agricultural competitiveness such as Singapore and

Brunei should specialize in the processed and high-value agricultural sectors based on

their modern technology and abundant capital.

The ASEAN countries, however, seem to be relatively substitutable in agricultural

products. The study, generally, suggests that the ASEAN countries should cooperate to

take advantage of their economic resources and internal markets as a “common



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domestic” market to enhance the competitiveness and predominantly focus on the

external markets based on the global trade and economic agreements and partnerships of

the association and the member countries such as the RCEP, the TPP-CPTPP, and their

bilateral free trade agreements. Moreover, the ASEAN countries should specialize in

producing and exporting the agricultural products with comparative advantages and

import the uncompetitive products to enhance the regional trades, effectively utilize

their economic resources, and create higher social welfare based on the elimination of

import and export restrictions and the reduction in production subsidies.

Vietnam is a member of the ASEAN country. The country’s agricultural trade

pattern is relatively complementary to Brunei, Philippines, and Indonesia whilst it is

competing with Thailand, Cambodia, and Singapore in agricultural products. Therefore,

Vietnam should take advantage of the agricultural markets of Brunei, Philippines, and

Indonesia by the agricultural commodities with the comparative advantages. The

country, however, should cooperate with Thailand, Cambodia, and Singapore to develop

the external markets and avoid the competition in the regional market, especially

Vietnam’s local market. Moreover, China (including Hong Kong), the U.S., Japan,

India, EU, Korea, and Australia are the biggest agricultural markets. Thus, Vietnam,

cooperating with the ASEAN countries, should enhance the stronger partnership (such

as the RCEP, the TPP- CPTPP), expand the general and bilateral free trade agreements

to enhance the greater trade flows to the global markets.

Building the agricultural production master plans

The incomes and livings of the farmers depend on the profits of their crops. In turn,

the profits are impacted by the price and quantity of the products. The questions are

what crops to choose, why to choose the crops, and how to transfer the crops?

Responding to these questions require the farmers, the policy makers, and the

enterprises to have the reference indicators which may capture the various components

and perspectives in the studied cases. The agricultural competitiveness indicators by the



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