Impact of the free trade agreements on Vietnam’s pharmaceutical import: An application of the gravity model

By Hoang Thi Ngoc Thang (VNP 26)

Supervisor: Dr. Ho Hoang Anh

Abstract:

This thesis evaluates the impact of free trade agreements on the pharmaceutical imports of Vietnam. We apply the gravity model to a panel data of 112 countries for the period 2000-2018. To solve two potential problems of the gravity model created by heteroscedasticity and zero trade values, we employ the standard Poisson Pseudo Maximum Likelihood (PPML) estimator. We also add the fixed effect and lagged effect in the model to mitigate potential endogeneity. Our results demonstrate that free trade agreements can increase Vietnam's pharmaceutical imports. However, each separate agreement has a different impact. In addition, we find that the impacts of trade agreements can change over time.