Submitted by : Deepak Pant [15] Deepak Dhingra [16] , Ankush Seth [09]

Introduction

In this Assignment, we have chosen Vietnam as a country of our choice to find out top ten potential exports.

Vietnam’s economy continues to expand at an annual rate in excess of 7%, one of the fastest growing in the world, but it grew from an extremely low base, as it suffered the crippling effect of the Vietnam War from the 1950s to the 1970s, as well as the austerity measures introduced in its aftermath In 2012, the communist party was forced to apologize about the mismanagement of the economy after large numbers of SOEs went bankrupt and inflation rose. However the government have launched schemes to reform the economy such as lifting foreign ownership cap from 49% and partially privatizing the countries State owned companies which have beenresponsible for the recent economic downturn by the end of 2013 the government are expected to privatize 25–50 percent of most SOEs only maintaining control on public services and military. The recent reforms have created a major boom in the Vietnamese stock market asconfidence in the Vietnamese economy are returning

In 2007, Vietnam ran a trade deficit of US$14.1 billion, but the trade deficit for the first half of 2008 alone was measured at US$14.8 billion.

In 2012, Vietnam recorded a trade surplus of US$780 million, the first trade surplus since 1993. Total trade reached US$228.13 billion, an increase of 12.1% from 2011.

In 2012, export rose 18.2%, valued at US$114.57 billion Vietnam's main export market included the EU with US$20 billion, USA with US$19 billion, ASEAN with $US 17.8 billion, Japan with US$13.9 billion, China with US$14.2 billion, and South Korea with US$7 billion.

In 2013, export rose 15.4%, valued at US$132.17 billion, of which export of electronics now comprised 24.5% of total export, compared with a 4.4% in 2008. Textiles and garments are still an important part in Vietnam's export, valued about US$21.5 billion in 2013.

So, overall in the last 5 years, Vietnam's exports have doubled as competitive minimum wage and low costs of utilities boosted foreign direct investment. Vietnam main exports are: miscellaneous articles including clothing and footwear (30 percent of the total shipments) and machinery, transports and equipment (23 percent). Others include: food and live animals (18 percent), manufactured goods (11 percent) and fuel (11 percent).

In this study, we will extract the top exports from Vietnam via the data fetched from WITS ( UN COMTRADE) and doing SHIFT-SHARE analysis.

Methodology

We have first extracted the export data from Vietnam to world for ALL3 -- Sub-Heading (all 6-digit HS codes ) of year 2012 and 2013 through WITS TRADE DATA (UN COMTRADE), then we have conducted the analysis using SHIFT SHARE method.Based on the average growth of all markets that are studied, an expected growth figure is computed.

Afterwards, the expected growth rate of each market is compared with its actual growth. If the share in a particular market was increased, the difference in the net shift is said to be positive, otherwise if there is a negative net shift, this implies loss of the share over the period.

The magnitude of the gain or loss stands for the differences between that market’s actual performance and theperformance it would have had if its growth rate had been equal to the average growth of the wholemarket. The shift-share technique which is a statistical technique is employed to analyze data. Thistechnique analyzes changes in trade over the intervening period of time on the basis of the exportchanges that take place in the market share.

Implementation

1) We have first calculated the expected value of the growth by multiplying the export value with the initial period (2012 in our case) by all markets growth rate. The growth rate can be calculated by dividing the sum of all values of terminal period( 2013 in our case) by sum of all values of initial period ( 2012)

2) Then we have calculated the expected change of the value of a growth variable for a particular item in a given time period which is the difference between the expected value and the actual value for the item at the end of the initial time period(2012). If E(ΔVi) is the expected change, then

E(V i , t )=kV i , t−z

E( ΔV i )=E(V i , t )−V i , t−z

3) Shift-share analysis requires measurements on a variable of interest (an exported product) for each member of the group (exported items) at the beginning and end of a specified period of analysis. In other words, the export value at the end of terminal period minus the export value at the end of initial period for each item. The growth rate (GR) of the item (i) can be measured as:

4) After calculating this, we have then calculated the difference between the actual change and the expected change i.e.The net shift. So, the Net Shift is:

5) Now the sum of positive net shifts or the sum of negative net shifts S represents the total absolute net shift,which is calculated by:

Note:In our case, we used only positive values to calculate the absolute net shift.

6) Finally we have calculated the relative gain or loss in the value of a growth variable for a particular product i, in a given time period is defined as the percentage net shift (which represents market gain or loss) Pi

Where

ΔV i=V i , t−V i ,t− z

Ni=ΔV i−E (ΔV i )

S=∑i=1

n

|ΔV i−E(ΔV i )|

2

Pi=N iS

(100 % )

Final Result

After calculating Pi, we have arranged the product in decreasing order of their Pi value. As per this calculation, the Top 10 export product of ALL3 -- Sub-Heading (all 6-digit HS codes) from Vietnam are:

S.No/Rankings

Product code Pi

1 851712 80.365639922 847130 16.817363543 640399 8.614798184 640419 4.723113085 30617 2.654170846 170199 2.020776197 640391 1.992002798 630312 1.746860349 160521 1.6432801910 871120 1.60845861

And the nomenclature for the above mentioned Product codes are mentioned below as per their rankings:

1) Telephone for cellular networks or for other wireless networks.2) Portable automatic data processing machines, weighing not more than 10Kg,

consisting of at least a central process unit (CPU), a keyboard & a display.3) Other - In Footwear with Outer Soles of rubber, plastics, leather or composition

leather and uppers of leather4) Other - In Footwear with Outer Soles of rubber, plastics, leather or composition

leather and uppers of textile materials5) Other Shrimps & Prawns Under - Crustaceans , whether in shell or not, live , fresh,

chilled, frozen, dried, salted or in brine, smoked crustaceans, whether in shell or not, whether or not cooked before, or during the smoking process, crustaceans, in shell, cooked by steaming, or by boiling.

6) Other - In Cane or beet sugar and chemically pure sucrose, in solid form7) Covering the ankle Under - In Footwear with Outer Soles of rubber, plastics, leather or

composition leather and uppers of leather8) Of Synthetic fibers Under - Curtains ( including Drapes)and interior blinds; curtain or

bed valances9) Not in Airtight Container Under - Crustaceans, molluscs & other aquatic invertebrates,

prepared or preserved.10) With Reciprocating internal combustion piston engine of a cylinder capacity exceeding

50 cc but not exceeding 250cc Under - Motorcycles ( including Mopeds) & cycles fitted with an auxiliary motor, with or without side - cars; side-cars.

The trend in exports is visible via the chart mentioned below. The chart includes export data of Vietnam for the year Jan 2012- Dec 2013

In attached Excel sheet, we have computed all the above mentioned values. The above mentioned formulae’s have been used in excel sheet to get the data. Also, separate 3 tabs have been used in excel file to show the computation of Si , Formulae’s used and Data extracted from WITS site.