Vietnam coffee export and macroeconomic factors: an ARDL analysis

Abstract

Vietnam's coffee holds a prominent position as one of the top agricultural exports, making a substantial impact on the nation's economy through foreign exchange earnings and income for local citizens. As such, a detailed and all-encompassing assessment of Vietnam's coffee export activities is essential, focusing on factors influencing coffee exports and examining economic data from previous years. This evaluation aims to identify strategies to enhance both the volume and value of coffee exports. To achieve this research objective, the study utilized the theoretical framework of coffee exports and incorporated insights from prior research on export-related subjects. The selection of relevant information guided the study's direction. The research scope encompassed essential variables are coffee export turnover, interest rate, exchange rate, inflation, and FDI, covering the period from January 2008 to September 2022. The study gathered and analyzed secondary data from reputable sources, employing the ARDL-ECM model for estimation. The model's results demonstrate that the exchange rate, interest rate, inflation, and FDI have an impact on coffee export turnover in the short and long term in different directions. For specific, both interest rate, inflation, and foreign direct investment do not have a favorable impact on Vietnam's coffee export turnover, whereas the exchange rate has a strong influence on export turnover in the long run. With the result from the estimation by ECM with the ARDL approach, the finding shows that in the short-term, the inflation rate has a significant effect on export turnover. The other variables including the interest rate, exchange rate, and foreign direct investment do not have a counted relationship with export turnover in the short run. Furthermore, the Error Correction Term was also employed to determine the speed of an adjustment of a short-term equilibrium towards the long term. We found that the higher speed of adjustment indicates a stronger tendency for export turnover to return to its long-term equilibrium after a shock. Based on these findings, the authors proposed policy implications aimed at promoting enterprise initiatives and stimulating coffee export activities, with the aim of capitalizing on opportunities and effectively addressing future challenges.