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Vietnam's Long-run Growth: Connecting the Dots through Climate Damage Spillovers

Author

Listed:
  • Mania, Elodie

    (LASTA, University of Rouen Normandy, Faculty of Law, Economics and Management, France)

  • Nguyen, Thi Thu-Ha

    (World Bank in Vietnam, Hanoi, Vietnam)

  • Rieber, Arsène

    (LASTA, University of Rouen Normandy, Faculty of Law, Economics and Management, France)

  • Tran, Thi Anh-Dao

    (LASTA, University of Rouen Normandy, Faculty of Law, Economics and Management, France)

Abstract

We propose to examine how climate damage may transform Vietnam's long-run growth rate. Because of cross-country linkages forged by bilateral trade, there are two channels through which international damage spillovers may occur. First, the dynamics of partners' growth determine future trends in Vietnam's volume of exports. Second, since the domestic impact of climate change may be heterogeneous across countries, there will be a differentiated impact on export and import market shares. Both terms play a critical role in changing trade patterns that are likely to shift Vietnam's external constraint. This demand-side view of growth based on the balance-of-payments constraint is a powerful predictor of inter-country growth differences. Our study show that the consequences of climate change could equate to a 2.5% reduction in Vietnam's growth rate over the period 2020-2060. Our decomposition exercise by effect and by partner area shows that international damage spillovers result from very different individual behaviours.

Suggested Citation

  • Mania, Elodie & Nguyen, Thi Thu-Ha & Rieber, Arsène & Tran, Thi Anh-Dao, 2024. "Vietnam's Long-run Growth: Connecting the Dots through Climate Damage Spillovers," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(1), pages 227-252.
    • Handle: RePEc:ris:integr:0900
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    Keywords

    balance-of-payments-constrained growth model; climate change adaptation international damage spillovers macroeconomic resilience Vietnam;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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