UEH UNIVERSITY

SCHOOL OF FOREIGN LANGUAGE

**********
ESSAY

COURSE: MICROECONOMICS (23D1ECO501005)

Topic: RESEARCH OF VIETNAM’S FOREIGN TRADE

IN THE YEAR 2022

Lecturer : Mr. Nguyen Thanh Trieu

Class: AV002
Practice group: Group 2
Group members:

Student name Responsibility in Assignment Participation %

1. Nguyễn Ngọc Phương Anh Part I, II.1, III 100%

2. Hà Gia Hân Part 2.1 100%
3. Lê Nguyễn Kim Ngân Part 2.4 100%
4. Nguyễn Đăng Uyên Nhi Part 2.2 100%
5. Trần Vũ Linh Oanh Part 2.3 100%

Signature:
a. _____________ d. ______________

b. _____________ e. ______________

c. _____________
 TABLE OF CONTENTS

PART I: INTRODUCTION .......................................................................................1

PART II: ESSAY CONTENT ....................................................................................2

1. THEORETICAL BACKGROUND........................................................................2

1.1. Interdependence and the gains from trade...............................................................2

1.2. International trade ...................................................................................................2

2. RESEARCH OF VIETNAM’S FOREIGN TRADE IN 2022

2.1 Independence promoted in economic recovery and development of Vietnam.........4

2.2 The optimistic trend of trading in Vietnam after Covid19........................................6

2.3 Assessing the trend of Vietnam’s foreign trade in 2022...........................................8

2.4 Orientation of Vietnam’s foreign trade in the future.............................................10

PART III: CONCLUSION .......................................................................................12

SOURCE AVAILABLE ..........................................................................................13

TABLE DATA AND GRAPH

Table 1.1: The welfare effects of trade

Table 2.3: Import and Export Turnover in 2022 (USD billion)
 PART 1 : INTRODUCTION
People knew how to trade goods a long time ago and barter had initially been an
important part of their life. As time goes by, other methods trading have grown and
trading has been an essential role in a country’s economy and its overall development.
Each country has its own characteristic products and the people try to launch them into
the market as well as export them to other countries. Therefore, many countries in the
world have been interdependent and import and export are the main methods of
trading, largely contribute to a nation’s growth. With the “Doi Moi” economic reforms
initiated in 1986, it has brought profound changes to Vietnam by forcing to liberalize
trade, devaluing its exchange rate to enhance exports. From a low starting-point,
Vietnam has evolved strongly with new opportunities to establish good relationships
with major powerful nations and record better results in international market over the
past 30 years.

Understanding the impact and crucial role of global trading, our group 2 decided to
come up with the topic “Research of Vietnam’s foreign trade in the year 2022”. In
this essay, there will be inevitable shortcomings, we are looking forward to your
comments to better the essay.
Sincerely thanks,
Group 2

1
 PART II: ESSAY CONTENT

1. THEORITICAL BACKGROUND
1.1. Interdependence and the gains from trade
1.1.1. Definition
Economic interdependence means the mutual dependence of the participants in
an economic system who trade to import the products they cannot produce efficiently
for themselves.

1.1.2. The determinants of the gains from trade

a. Comparative advantage
Comparative advantage means the ability to produce a good at a lower opportunity
cost than another producer.
When each country specializes in the good(s) in which it has a comparative advantage,
total production in all countries is higher, the world’s “economic pie” is bigger, and all
countries can gain from trade.

b. Absolute advantage
Absolute advantage means the ability to produce a good using fewer inputs than
another producer.
If each country has an absolute advantage in one good and specializes in that good,
then both countries can gain from trade.

1.2. International trade

1.2.1. Definition
a. Exports:
Goods products domestically and sold abroad.

2
b. Imports:
Goods produced abroad and sold domestically.

1.2.2. The determinants of how much a good a country will export or import

a. World Price (denoted by PW)

b. Domestic Price (denoted by PD)

If PD < PW, the country has comparative advantage in the good and under free trade,
country exports the good.
If PD > PW, the country does not have comparative advantage and under free trade,
country imports the good.

1.2.3. The welfare effects of trade

Table 1.1: The welfare effects of trade
PD < PW PD > PW
Direction of trade exports imports
Consumer surplus falls rises
Producer surplus rises falls
Total surplus rises rises

Whether a good is imported or exported, trade creates winners and losers. But the
gains exceed the losses.

1.2.4. Trade agreements

A country can liberalize trade with unilateral reductions in trade restrictions and
multilateral agreements with other nations.
Examples of trade agreements: North American Free Trade Agreement (NAFTA),
1993 General Agreement on Tariffs and Trade (GATT), ongoing.

3
World Trade Organization (WTO) est. 1995, enforces trade agreements, resolves
disputes.

2. RESEARCH OF VIETNAM’S FOREIGN TRADE IN 2022

2.1 Independence promoted in economic recovery and development of Vietnam

The COVID-19 pandemic has had a significant impact on the global economy, leading
to widespread job losses, business closures, and economic downturns. As Vietnam
continued to grapple with the pandemic, there had been increased emphasis on the
need for economic recovery. One of the key aspects of this recovery was the
promotion of independence, especially in the economic sector. Independence was a
crucial element in economic recovery after COVID-19 and allowed for development,
which has since become a driving force behind the country's progress.

- Independence in economic recovery after COVID-19:

+ Promoting local production

One of the ways to promote independence in economic recovery after COVID-19 was
through the promotion of local production. Achieving this by investing in local
industries and businesses, promoting entrepreneurship, and developing local supply
chains. By doing so, Vietnam can reduce its dependence on imported goods, create
jobs, and drive economic growth. In 2022, the industrial and construction sector
increased by 7.78%, whereas the services sector rose by 9.99%, and the agricultural
sector had an upturn to 3.36%. Exports in 2022 were up 10.6% to $371.85 billion,
while retail sales rose 19.8%, the GSO said, while consumer prices in December rose
4.55% from a year earlier.

- Developing Resilient Supply Chains:

4
Another way to promote independence in economic recovery after COVID-19 was by
developing resilient supply chains. Vietnam achieved this by diversifying its supply
chains, investing in technology and innovation, and building strategic partnerships. By
doing so, Vietnam can reduce the risk of supply chain disruptions and ensure the
availability of critical goods and services. The development of resilient supply chains
was an essential component of economic independence. It can help Vietnam reduce its
dependence on a single supplier or region and reduce the risk of global economic
shocks. It can also promote technological innovation in supply chain management,
leading to better logistics and transportation efficiencies.

- Independence in Development of Vietnam:

+ Economic Development

Since gaining independence, Vietnam has made significant strides in its economic
development. The country's economy has grown at an average of 6% per year since
the 1990s, making it one of the fastest-growing economies in the world. This growth
has been driven by a variety of factors, including foreign investment, a focus on
exports, and the development of key sectors such as manufacturing and technology.

Foreign investment has played a significant role in Vietnam's economic development.

The government has actively sought to attract foreign investment, offering incentives
such as tax breaks and streamlined regulations. This has resulted in a significant influx
of foreign investment, particularly in sectors such as manufacturing and technology.

Exports have also been a significant driver of economic growth in Vietnam. The
country has focused on developing its export capabilities, particularly in sectors such
as textiles, electronics, and seafood. This has resulted in a significant increase in
exports, which has helped to fuel economic growth.

The development of key sectors such as manufacturing and technology has also been a
significant driver of economic growth in Vietnam. The government has invested

5
heavily in these sectors, offering incentives such as tax breaks and infrastructure
development. This has resulted in the growth of key industries such as electronics,
automotive, and software development.

+ Social Development

Independence has also had a significant impact on the social development of Vietnam.
The country has made significant strides in improving living standards, with poverty
rates falling from over 70% in the 1980s to less than 10% today. In addition, the
government has invested heavily in education and healthcare, resulting in significant
improvements in literacy rates and life expectancy.

The government has made significant investments in education, with a focus on

improving access to education and increasing the quality of education. This has
resulted in significant improvements in literacy rates, with over 90% of the population
now able to read and write.

The government has also invested heavily in healthcare, with a focus on improving
access to healthcare and increasing the quality of healthcare. This has resulted in
significant improvements in life expectancy, with the average life expectancy in
Vietnam now at 75 years.

2.2 The optimistic trend of trading in Vietnam after Covid 19

There are many ways to purchase and sell goods in our country such as: exporting and
importing nationally or internationally. Due to the Covid 19, the economy was
affected dramatically, especially logistics so Vietnamese find it challenging to buy
products because delivery has been prevented. However, it leads to many changes in
the trend of trading in Vietnam after the pandemic. Although there are some positive
and negative circumstances, let’s discuss the optimistic phenomena.

6
- Online trading:
Because of the social quarantine, people were not allowed to go outside. It causes
many issues in shopping. Therefore, it helps many platforms such as Grab, Beamin,
and Gojek, considerably increase. Nielsen and In-focus Mekong Mobile Panel have
surveyed over 500 people in Hanoi, Danang, and HCM City, which shows that there is
a 75% of customers stop purchasing directly at stores. 35% of people said that they
want to spend more time using an online app to solve that problem. One database
shows that Tiki, Lazada, and Sendo have 24M, 19.76M, and 17.59M users per month
prospectively, while Shopee ranked first with 43.15M users. Moreover, the
Vietnamese have suffered long-term social distancing. Therefore, they tend to
consume less cash and more credit card.
That figure is a good sign for developing O2O (Online-to-Offline) model in Vietnam,
which means that Covid 19 is a two-sided phenomenon due to its benefit to many
trends occurring in our economy.

- Consuming more domestic products:

During the pandemic, it prevents us to import or export to other countries, so more
citizens decide to buy Vietnamese brands. There is 76 percent of Vietnamese choose
to consume domestic products after Covid19. It helps us to increase the quantity of
supply, which means that firms will try to develop their productivity. As we studied in
the textbook, a country’s standard of living depends on its ability to produce goods
and services. Moreover, if citizens spend more on house products, it proves that they
not only have high quality but are reasonable to the consumers. Therefore, it is easier
to persuade international customers. This leads to the development of export to other
countries.

- Technology application in distribution:

7
Apart from the consumers, many businesses also try their best to prolong the product
lifecycle. Among the variety of options, the delivery is now noticed. Because of the
quarantine, people were restricted to go outside. In addition, the pandemic has affected
the arrival time. To deal with this situation, the business has created a new model.
They applied technology such as block-chain or AI for promoting logistics. Block-
chain can show us the weakness in logistics. For example, when delivering goods,
businesses can easily keep track of the location, and maintain the temperature. This
advance let them find it easier when delivering perishable goods. In conclusion,
changing the business model meet the demand for a modern lifestyle.

2.3 Assessing the trend of Vietnam’s foreign trade in 2022

- Overview of Vietnam’s foreign trade in 2022
After more than two years of struggle owing to the COVID-19 pandemic, the overall
export and import of products turnover for the entire year 2022 reached a record of
732.5 billion USD, up 9.5% from 2021. In the first months of 2022, the Covid-19
epidemic continued to develop complicatedly, causing negative impacts on economic
activities, in which the import and export of goods were severely affected, countries
tended to use domestic products instead of imported products, especially agricultural
and aquatic products. The year 2022 also took place in the context of the world
economy having many rapid and unpredictable changes, increasing risks to financial
markets, currency, energy security, and global food security. However, the second half
of the year witnessed a strong recovery of the economy when effective control was
started and the pandemic was initially overcome. GDP growth for the whole year 2022
was estimated at 8.02% compared to the previous year, which is the highest increase
in years in the period 2011-2022. In the general picture, there were many bright spots,
one of which is import and export activities with the total export and import turnover
of goods reaching a record level exceeding 700 billion USD.

8
 Table 2.3: Import and Export Turnover in 2022 (USD billion)

Export - Import Turnover Export Import Trade balance

732.5 371.85 360.65 11.2

- The specific data

+ Export
Merchandise export turnover in 2022 was estimated at 371.85 billion USD, an
increase of 10.6% over the previous year. Meanwhile, the domestic economic sector
grew by 6.5% to 95.09 billion USD, accounting for 25.6% of total export turnover; the
foreign-invested sector (including crude oil) reached $276.76 billion, up 12.1%,
accounting for 74.4%. In 2022, there are 36 items with export of over 1 billion USD,
accounting for 94% of total export turnover (there are 08 export items with over 10
billion USD, making up for 70.1%).

+ Import
The import turnover of goods was estimated at US $ 360.65 billion, up 8.4%
compared to 2021, of which the domestic economic sector reached 125.79 billion
USD, up 10%. Foreign investment areas reached US $ 234.86 billion, up 7.5%. In
2022, 46 imported goods were worth over 1 billion USD, accounting for 93.3% of the
total import turnover (06 imported items of over 10 billion USD, accounting for
52.1%).

- Export and import markets

In terms of export and import markets in 2022, the United States was Vietnam's top
export market, with an anticipated turnover of 109.1 billion USD. With an anticipated
turnover of 119.3 billion USD, China was Vietnam's largest import market. In 2022,
the trade surplus to the EU was expected to be 31.8 billion USD, an increase of 36.8%
over the previous year; the trade deficit from China was 60.9 billion USD, an increase

9
of 11.5%; the trade deficit from Korea was 38.3 billion USD, an increase of 11.5%;
and the trade deficit from ASEAN was 13.6 billion USD, an increase of 10.6%.

2.4 Orientation of Vietnam’s foreign trade in the future

Vietnam's foreign trade expected to grow beyond expectations.

- Vietnam is the destination of FDI inflows

The fastest growth in orders from overseas clients in the previous four years
contributed to a spike in January's Purchasing Managers' Index (PMI) for Vietnam. To
fill orders, FDI businesses imported more materials. As a result, this year's
manufacturing sector growth is probably going to be greater than anticipated.

Moreover, LEGO Group (Denmark) will make the world's first carbon-neutral factory
in Vietnam. The ESG (environmental, social, and political) values of Vietnam will be
strengthened by this investment, which will also draw global businesses that place a
high priority on sustainable development.

- Vietnam is a lucrative destination for foreign investment

Due to an expanding middle class and an increase in manufacturing and exports, an
adding number of brands are eager to make an entry into Vietnam.
Apple is in the process of shifting Apple Watch and Mac product to Vietnam as part of
a broader drive to diversify its force chain.
Vietnam has demonstrated incredible versatility recently. Vietnam was one of the few
nations to achieve GDP growth in 2020, at a time when the majority of other nations'
economies were in ruins. The economy had a difficult year in 2021, but it is
anticipated that it would recover to 5.5 percent in 2022.
To entice foreign businesses wishing to develop local production and distribution of
their products, the government offers a variety of advantages.

10
This rapid growth and a consumer-driven modern lifestyle have set the stage for
foreign investment. There have been shifts in consumer spending and behaviors, and
an understanding of these changes and the cultural nuances of the local population are
critical to successful market entry in Vietnam.

- Australia and diplomatic relations

Currently, one of Australia's most significant trading partners is Vietnam.
Data showed that two-way commerce experienced a year-on-year gain of 26.9% to
15.7 billion USD last year, of which 5.6 billion USD came from Vietnam's exports,
and 10.1 billion USD from its imports, up 26.2% and 27.3%, respectively.

“I think I can say very confidently that at no time in history has our relationship been
stronger or better than it is today. It’s built on a very strong feeling of mutual trust and
on practical cooperation across so many fields over so many years,”

– Australian Ambassador Andrew Goledzinowski –

11
 PART III: CONCLUSION

Through the analysis of Vietnam’s foreign trade in the year 2022, we come to the
realization that Vietnam’s recovery after being dramatically affected is positively
prompt. There were significant changes regarding the trend of trading that contributed
to the rapid growth of the year 2022. Despite the fact that there was a downturn in the
year 2021 due to a 4-month lockdown, these changes have been a good basement for
the development trading such as online trading growth and the consumption of
domestic products. The government has encouraged and pushed foreign trading along
with domestic development, which attribute to the strong growth of the country’s
economy in 2022 in general and the foreign trade in specific. Through this research,
we can see that there is a likelihood that Vietnam’s trade will continue to grow
positively in the future.

Through this study, although knowledge is still limited, we hope to help everyone
have an overview of Vietnam’s foreign trade in 2022 and the orientation of it in the
future.

12
 SOURCE AVAILABLE
1. Principles of Microeconomics (N. Gregory Mankiw).
2. https://ca.finance.yahoo.com/news/vietnam-2022-gdp-growth-quickens-
021745202.html
3. https://special.vietnamplus.vn/2023/03/07/vietnam-australia-eye-comprehensive-
strategic-partnership-after-50-years-of-relations/
4. https://moit.gov.vn/tin-tuc/bo-cong-thuong-voi-doanh-nghiep/xu-huong-tieu-dung-
hien-dai-lam-thay-doi-mo-hinh-kinh-doanh-.html
5. sociologyhue.edu.vn
6. https://www.customs.gov.vn/index.jsp?
pageId=4967&tkId=6085&fbclid=IwAR1SGTCcFvC7w3vO5bca9eAi4eCYuDGM0
MiJcSWdANlCKWSrkC_UCBMCT4I
https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2023/01/no-luc-phuc-hoi-xuat-
nhap-khau-nam-2022-lap-ky-luc-moi/#:~:text=Trong%20n%C4%83m%202022%20c
%C3%B3%2046,%C4%91%E1%BA%A1t%20109%2C1%20t%E1%BB
%B7%20USD
7. https://vietnamnet.vn/en/vietnams-economy-expected-to-grow-beyond-
expectations-foreign-funds-821831.html
8. https://kadence.com/en-us/what-makes-vietnam-an-attractive-destination-for-
foreign-investment
9. https://special.vietnamplus.vn/2023/03/07/vietnam-australia-eye-comprehensive-
strategic-partnership-after-50-years-of-relations/

13