Estimating the Economic Effects of Trans-Pacific Partnership (TPP) Agreement on Vietnamese Economy

Some of ASEAN are experiencing a rapid proliferation of free trade agreements (FTAs) and regional trade arrangements (RTAs). These FTAs have been creating a potential “noodle bowl” situation. Therefore, FTAs must be modelled to reduce “noodle bowl” effects. Conducting solid economic studies of FTA or RTA impact assessment is particularly important for ASEAN countries because it is not only to adjust the policies of each country but also to contribute the formation of the ASEAN Economic community (AEC) by 2015. However, understanding and discover the appropriated models of an impact assessment is not easy. . Developed countries usually use Computable General Equilibrium (CGE) models or partial equilibrium models to estimate the economic effect of a FTA. These models assume a stable market economy and prices are set by the equilibrium between supply and demand. However, the some ASEAN countries are still in transition to market economy. CGE or partial equilibrium models are not suitable for such economies. In addition, it is difficult to find enough data for constructing CGE or partial equilibrium models from ASEAN countries because these models are sensitive to missing or incorrect data. The research uses a new approach by combing the static Input-Output and Johansen models for estimating the economic effects of TPP on the Vietnamese economy in the next 10 years. The calculation of industry multipliers of each scenario provides impact assessments.