Comparative and Competitive Advantage of the Shrimp Industry in Mekong River Delta, Vietnam

Topics: Economics, Shrimp farm, International trade Pages: 24 (3843 words) Published: December 21, 2012
Nguyen Tuan Kiet and Zenaida M. Sumalde


Comparative and Competitive Advantage
of the Shrimp Industry in
Mekong River Delta, Vietnam
Nguyen Tuan Kiet

Can Tho University, Vietnam

Zenaida M. Sumalde

University of the Philippines Los Baños, Philippines

Given the growing prominence of Vietnam’s fishery products in the world market, this study examines data on shrimp aquaculture in the country, as practiced through intensive and semi-intensive methods, in two provinces in the Mekong River Delta region. The study estimates the comparative and competitive advantage of the shrimp industry using various approaches, namely: 1) the RCA or revealed comparative advantage; 2). the Policy Analysis Method (PAM) method to calculate the resource cost ratio (RCR) and RCR* indices; and 3) the Net Social Profitability (NSP) and Net Private Profitability (NPP). To identify the effects of changes in key factors affecting competitive and comparative advantage, a sensitivity analysis is conducted.

The results show that Vietnam’s shrimp products maintain a strong competitive position in the world market, as evidenced by an RCA greater than 1. The RCR and RCR* estimates bordering on zero also indicate the strong comparative and competitive advantage of the shrimp industry. These findings are bolstered as well by the resulting NSP and NPP estimates. Furthermore, in terms of farming methods, the lower RCR and RCR* estimates for the intensive farms confirm their higher comparative and competitive advantage, compared to the semi-intensive model. Finally, the sensitivity analysis shows that the comparative and competitive advantage of shrimp is strongly sensitive to the price of feed, exchange rate, shrimp yield, and export price. The wage rate also exhibits a slight effect on the industry’s standing in the world market.

Improving the productivity and quality of shrimp is shown to be vital to the MRD shrimp industry because this would translate into a higher export price and higher yield of shrimp, which will further enhance the industry’s comparative and competitive advantage.


Asian Journal of Agriculture and Development, Vol. 5, No. 1

Background of the Study
In the late 1980s, when Vietnam’s leaders
changed the course of the country’s history by
introducing “Doi Moi”, a series of reforms which
saw the shift from a centrally planned oriented
reforms, Vietnam has recorded some of the
highest economic growth rates in the region. It has
emerged from economic and political isolation,
attracting the international attention of investors,
economists, and regional political leaders─ all
of whom hope to witness, and profit from, the
development of the country perceived to be the
next Asian “Tiger”.
As of 1998, Vietnam had 187 seafood
processing factories, with a freezing capacity of
about 200,000 tons/year. A total of 27 factories
had passed the standards required by European
markets. Vietnam’s fishery products are exported to
most regions of the world. In 1998, these products
were consumed in 50 countries and territories.
The export turnover had increased dramatically to
US$1.777 billion in 2001, equal to 217 percent
of the volume in 1998. It is estimated that the
fisheries sector contributes as much as 12 percent
to the national total export value. The main export
products of Vietnam in recent years have been
frozen shrimp/prawn, frozen finfish, dried squid,
mollusk/crustacean, and tuna. Among the export
products, frozen shrimp/prawn has the highest
value, contributing 44 percent to the total fisheries
export value, while accounting for 23 percent
of the total export volume. Vietnam’s fishery
products have been widely consumed in the major
export markets such as the United States, Japan,
and Europe. In 2001, the US received the largest
share (28 percent) of fishery products exported
by Vietnam, closely followed...
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