Determinants of Intra-Industry Trade for Vietnam’s Manufacturing Industry

Abstract:This study focuses on identifying the country-specific determinants of intra-industry trade in the manufacturing sector between Vietnam and major trading partners using random effects estimation. The results indicate that the extent of Vietnam’s intra-industry trade is positively correlated with average country size and average income levels, while it is negatively correlated with income inequality, distance, and trade imbalance. Those factors affect horizontal intra-industry trade (HIIT) and vertical intra-industry trade (VIIT) in the same way except for the effect of income inequality (DPCI) on VIIT with an unexpectedly statistically insignificant impact. The coefficient of FTA is unexpectedly insignificant in three estimations, indicating an ambiguous effect of the participation in regional economic integration schemes on the share of IIT, HIIT and VIIT.