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Impact of Trade Policies on Industrial Pollution in Vietnam

Impact of Trade Policies on Industrial Pollution in Vietnam. Purpose of paper. Study linkages between trade and industrial pollution in Vietnam SAM for Vietnam and World Bank IPPS => estimates of industrial pollution in Vietnam

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Impact of Trade Policies on Industrial Pollution in Vietnam

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  1. Impact of Trade Policies onIndustrial Pollution in Vietnam

  2. Purpose of paper • Study linkages between trade and industrial pollution in Vietnam • SAM for Vietnam and World Bank IPPS => estimates of industrial pollution in Vietnam • Simulation exercise: examine how exogenous trade shocks affect resource allocation, and hence pollution

  3. Outline of paper • Introduction • Trade and environment linkages: some theoretical and empirical backgrounds • Vietnam’s trade policies and industrial pollution • Trade and pollution linkages in Vietnam: a SAM multiplier analysis • Conclusion

  4. Trade Policies in Vietnam • Major trade reforms since doi moi => much more open now compared to 15 years ago. • However, still a very protective trade regime • Tariff structure: low for capital goods and raw materials; high for finished goods • NTBs: cement, fertilizer, sugar, paper, alcohol, steel & iron, construction glass, motor vehicles, etc. • Protected industries also tend to be more pollutive industries

  5. FDI flows tend to follow trade policies: • Over half of FDI into Vietnam enters the services sector • Of the FDI in the traded-goods sector, a significant proportion is going into highly protected industries • FDI in clearly import-substituting industries is more than double that in clearly export-oriented industries => FDI tends to intensifies the effects of trade policies on environment

  6. Industrial pollution in Vietnam • Scale effect: rapid expansion of industry sectors => rapid growth in industrial pollution • Technique effect ? • Composition effect: two major trade/industrialization policy impact: export-oriented growth and ISI

  7. Development strategies and goals 2000-2010 • By 2010: double GDP; more than double exports; agriculture: 16-17%; industry: 40-41%; services: 42-43% • “The production development should be corresponding to the market demand, strongly oriented to export, and at the same time oriented to an effective import substitution …”

  8. “ … rapidly develop industries capable of promoting their competitive advantages, taking hold of domestic markets and pushing ahead exports, such as agricultural, forest and aquatic product processing, garment, leatherwear and footwear, electronics and informatics, certain mechanical products and consumer goods, etc …” • “… selectively build a number of heavy industry establishments: petroleum, metallurgy, mechanical engineering, basic chemicals, fertilizers, and building materials, etc. in rational sequences conformable with the capital, technology and market conditions, and capable of promoting efficiency …”

  9. In summary: general industrial development strategy is to follow an export-oriented industrialization, but ISI continues to be an influential view => important implications to trade policies and environment in the next few decades

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