The effect of exchange rate on shrimp export from Vietnam to the U.S

Abstract

A partial adjustment model of the U.S excess demand for Vietnamese shrimp is constructed to investigate the effect of the real bilateral exchange rate VND/USD on the U.S import of Vietnamese shrimp. Monthly data were collected from 2002:03 to 2011:12 for model development. The study found that the real appreciation of VND against USD has no effects on the U.S import quantity demanded for Vietnamese shrimp both in the short-run and the long-run. Therefore, Vietnamese government should not use exchange rate as a long-run tool to promote the Vietnamese shrimp to the U.S. However, it is found that the U.S import prices for Thai, Chinese and Indonesian shrimps have both short-run and long-run effects on the U.S demand for Vietnamese shrimps while the U.S import price for Indian shrimp has short-run effects only. Among them, the long-run effects of Thai price (-5.36) and Indonesian price (5.18) on Vietnamese shrimp export to the U.S are the largest ones. To develop the sustainable shrimp export, Vietnamese governors are encouraged to take priority over promoting the exportation of high quality, clean and diversified products, improving the competitiveness of Vietnamese shrimp in the U.S market.