Impact of ICT on Global Value Chain Participation of Vietnam: SMART Simulation Approach

The globalization in the digital era has influenced global value chains (GVCs) spreading all over the world comprehensively. However, the impact of information and communication technology (ICT) on GVC’s fragment should be considered prudently. To analyze ICT’s impact on GVC scattering and transformation in the digital era, this chapter divides ICT into information technology (IT) and communication technology (CT), with each type of technology liberalization bringing diverse effects to the way GVCs will be in the future. We applied tariff simulation analysis using partial equilibrium method via Single Market Partial Equilibrium Trade simulation model (SMART) of World Integrated Trade Solution (WITS) to discover the impact of ICT liberalization on Vietnam’s capacity of joining GVCs and exports. The simulation was implemented in two scenarios to discover the impact of information technology mobility and communication technology mobility via imposing zero tariff to these set of products within WTO (World Trade Organization) partners to Vietnam’s trade. The simulation results indicated that Vietnam’s exports will improve in both cases because of the positive trade creation effect. However, the difference between information technology (IT) imports growth and exports growth is much higher than one in communication technology (CT) trade, and there will be negative total trade diversion effect in case of facilitating IT products trade, while there would be positive total trade diversion effect in case of facilitating CT products trade.