The Impact of the World Trade Organization (WTO) on Foreign Trade: Case Study of Vietnam

Previous studies of empirical surveys that focus on WTO foreign trade effects on its country members have placed less attention on individual developing countries. This contrasts with the large body of studies that exist on the foreign trade effects of WTO on its entire country members. In this paper, two gravity models have been constructed using the Hausman–Taylor (1981) estimator, and applied to recent panel data that includes 17 of Vietnam’s major trade partners during the period from 1995 to 2011. This was for the purpose to examine the possible impact of the WTO regime on foreign trade (exports and imports) of Vietnam. The empirical results show that the WTO has stalwartly increased Vietnam’s imports. By contrast, there is no evidence that the WTO has expanded Vietnam’s exports. This is consistent with theoretical models of the WTO.