THE STRUCTURE OF COMMODITY TRADE BETWEEN THAILAND AND VIETNAM (2004-2013)

Using the quantitative approach as the main research methodology, this thesis analyzes trends and changes that have taken place in the structure of commodity trade between Thailand and Vietnam over the past decade (2004-2013). It will also provide several suggestions to promote Thailand-Vietnam commodity trade in the coming years. Findings show that along with the rapid growth in bilateral trade, trade composition between Thailand and Vietnam has changed positively towards increasing share of traded manufactures over the past decade. The thesis finds out that there has been a high share of trade in intermediate goods between the two countries, especially in Thailand’s exports while there has been a considerable growth in the share of final goods, especially capital goods in Vietnam’s exports. However, Vietnam has taken part only in assembling and processing stages with low value added and its exports to Thailand still depend heavily on comparative advantages over cheap labor and natural resources. Also, the thesis demonstrates that Vietnam’s exports have been less diversified as compared with Thailand. Although both countries enjoy a comparative advantage in primary products, there has been more medium and high technology products with high RCA index in Thailand’s exports as compared with Vietnam. This thesis therefore concludes that trade pattern between the two countries is a complementary trade relation. This thesis also argues that in order to promote Thailand-Vietnam commodity trade in the coming years, on Vietnam’s side, it should build appropriate policies on export-import orientation and export diversification. Vietnam should also enhance the competitiveness of domestic businesses as well as strengthen economic, trade and investment cooperation relations with Thailand.