Vietnam, a transitional economy that started its historic economic reform in 1986, has been
pursuing both the market-oriented and state-controlled developments for more than twenty years. This
study focuses on the country’s liberalization on internal and international trade polices, an important
path of economic reform, by measuring an index for import liberalization policy and then employing
“channel analysis” to quantify impacts of import liberalization on the country’s economic growth. The
study applies the method proposed by Wacziarg (2001) to Vietnamese data for the period 1986-2006
with necessary revisions to accommodate features of the Vietnamese economy. The estimated results
by 3SLS regression indicate positive impact of import liberalization on economic growth once the full
information of linking channels (government expenditure, macroeconomic quality, black market
premium, domestic trade, FDI and exports) have been accounted for. The study concludes that one unit
increase of import liberalization index improves economic growth rate by 0.304 percentage point. Of
this, increase in technological capability of exports, macroeconomic stabilization, and the efficiency
domestic trade is the prominent factors, each occupies roughly 25-30% of the overall channels’
impact.