The Global Economic Crisis as a Risk for the International Trade in Hanoi
International commerce is understood as international trade of goods and services such as in tourism, finance, banking and education. Since Vietnam is one of the countries that has the highest level of international economic integration in comparison with
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Introduction Risk is understood as the effect of uncertainty on objectives, whether positive or negative1 and risk management is “the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities”.2 Risks can come from uncertainty in financial markets, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. The recent global economic crisis can be considered as a huge risk for economic development in general and for international trade in particular, especially for an emerging economy like Vietnam. According to General Agreement on Tariffs and Trade (GATT) 1957, international commerce consists of international trade of goods and services, such as tourism, finance and banking and education, etc. International commerce always plays an important role in Vietnam in general and Hanoi city in particular. If taken total export turnover over GDP to measure the economy’s integration level and dependence on the global economy, Vietnam is definitely one of those that have the highest rate. In 1990, the export turnover accounted for 36 % GDP, but in
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ISO/IEC Guide 73:2009 (2009). Risk management – Vocabulary, International Organization for Standardization. 2 Hubbard, Douglas (2009). The Failure of Risk Management: Why It’s Broken and How to Fix It. John Wiley & Sons. H.A. Nguyen () Vice – Director of Institute of Economics and Trade, Lecturer of International Business, Foreign Trade University, 91 Chua Lang Street, Dongda, Hanoi e-mail: [email protected] C. Luetge and J. Jauernig (eds.), Business Ethics and Risk Management, Ethical Economy 43, DOI 10.1007/978-94-007-7441-4__10, © Springer ScienceCBusiness Media Dordrecht 2014
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2010, it amounted to approximately 70 %. Goods export has promoted the country’s economic growth and development for a long time. Since Vietnam joined the World Trade Organization (WTO) in 2007, its service market has opened to foreign firms. The number of foreign tourists coming to Vietnam is increasingly high, which considerably increases the government budget. More and more international banks have been operating in Vietnam, which made the banking field livelier. However, this also means that Vietnam economy is becoming more vulnerable and dependent on the changes of the world’s economy cycle. Hanoi is an important cultural, economic and trade center of Vietnam. Its export turnover accounts for about 10 % of the total export turnover of the whole country.3 Moreover, Hanoi is also a travel destination of many foreign tourists. Hence, the global financial and economic crisis has an enormous impact on the city’s global trade activities. The next sections will provide an overview of Hanoi’s level of international trade and how it has been impacted by the global econom
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