Study of potential impacts of ASEAN Economic Community (AEC) establishment to Vietnam in terms of Revealed Comparative Advantage

Abstract

The ASEAN Economic Community was officially declared to establish on 31st December 2015. This community consists of a single market and production base which allows the free flow of goods, services, skilled labor, and investments as well as the freer movement of capital across the region. Vietnam is a member of the ASEAN and in fact, faces both opportunities and challenges once the AEC being established. The paper applies Balassa’s revealed comparative advantages for Vietnam’s export products during the period from 2001 to 2014. Accordingly, natural resources intensive product and labor intensive products are dominating the top list of Vietnam’s revealed comparative advantages. From this result, the paper focuses on analyzing potential impacts of the AEC establishment to those product with revealed comparative advantages and also to products under governmental protection. Generally, the AEC opens up potential market opportunities for the industry of export manufacturing rice, coffee and products of textiles and footwear, while brings along challenges to the industry of automotive, of salt and sugar. A new national development strategy with a longer vision is strictly required once Vietnam integrates more and more into the global economy.