Determinants of Vietnam’s wood exports to oecd countries, 2004 – 2023 a panel data approach

Abstract

Research purpose: This study proposes the use of an extended gravity model that simultaneously integrates the following variables: GDP, SIML, LPI, FA, EXG, TEMP, EVENT, LAND, FTA, DIST, and OPEN. This comprehensive approach aims to analyze the factors influencing Vietnam’s wood exports to OECD countries over the period 2004 – 2023 in the context of deepening international integration. Research motivation: Vietnam has become a dynamic player in the global wood industry, and OECD countries remain its most important and high-potential markets. However, in-depth studies on Vietnam’s wood exports remain limited, and few have applied an extended gravity model to assess Vietnam's wood exports to OECD countries. Research design, approach, and method: The analysis employs an extended gravity model estimated with multiple econometric techniques, including Pooled OLS, Fixed Effects, Random Effects, Generalized Least Squares, and Poisson Pseudo Maximum Likelihood (PPML). The PPML estimator, implemented in Stata 15.0, is emphasized due to its ability to handle zero trade flows and fixed-effects issues common in panel trade data. Main findings: The results indicate that PPML is the most appropriate method due to its ability to address zero trade flows effectively. Specifically, the GDP of the importing country, economic size similarity, and the number of extreme weather events in the importing country have a positive impact on wood export value. In contrast, the importing country's logistics performance, forest area, and exchange rate exhibit negative effects. Practical/managerial implications: The results suggest that Vietnam should deepen integration with OECD markets through FTAs, adopt hedging tools to mitigate exchange rate volatility, and upgrade products with certification and branding to offset logistics disadvantages. Flexible production capacity can help capture short-term opportunities arising from climate-related shocks. Moreover, stricter sustainability regulations in OECD countries should be treated as catalysts for industry upgrading and long-term competitiveness