Vietnam - Sweden bilateral trade relations and the driving forces behind them

Abstract: Trade liberalization and the Vietnamese Government’s attempt to open up the market and integrate it with the global economy has had a great impact on the country’s trade sector. The trades flow between Vietnam and other trading partners including Sweden continues to grow. In particular, Vietnam’s export to Sweden has increased from nearly 230 to 900 million USD in a time span of three years from 2010-2013. This has raised an interesting question considering the determinants, i.e. the factors behind this rapid growth. Using a number of internationally recognized theories aiming to explain international trade, we have analyzed the trade of recent years between Sweden and Vietnam and identified a number of governing key factors behind it. In Vietnam, an abundance of natural resources and a substantial yet low cost labor force, together with the country’s accession to the WTO, significant market expansion and a high amount of Foreign Direct Investments leading to, among other things, technological innovation, have all been key in determining the country’s trade with Sweden. In Sweden, the key determinants have been an abundance in capital, both human and physical. However we believe the later factors do have a greater impact on Vietnam-Sweden trade relation and suggest that the Vietnamese Government should take this into consideration while pursuing and implementing its trade policy towards Sweden.