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Journal of Economic Integration 2024 March;39(1) :227-252.
DOI: https://doi.org/10.11130/jei.2024003
Vietnam's Long-run Growth: Connecting the Dots through Climate Damage Spillovers

Elodie Mania1 Thi Thu-Ha Nguyen2 Arsène Rieber 1 and Thi Anh-Dao Tran 1

1LASTA, University of Rouen Normandy, Faculty of Law, Economics and Management, France
2World Bank in Vietnam, Hanoi, Vietnam
Corresponding Author: Thi Anh-Dao Tran ,Email: thianh-dao.tran@univ-rouen.fr
Copyright ©2024 Journal of Economic Integration
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.

JEL Classification
E12: Keynes; Keynesian; Post Keynesian
F43: Economic Growth of Open Economies
F62: Macroeconomic Impacts
O57: Comparative Studies of Countries
Q01: Sustainable Development
Q54: Climate; Natural Disasters; Global Warming
Keywords: balance-of-payments-constrained growth model | climate change adaptation | international damage spillovers | macroeconomic resilience | Vietnam
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