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Economic growth and balance of payments constraint in Vietnam

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  • Rieber, Arsène
  • Bagnai, Alberto
  • Tran, Thi Anh-Dao

Abstract

Our paper examines the long run relationship between economic growth and the current account balance equilibrium by relying on the BoP constrained growth model. We find that Vietnam grew less than the rate predicted when the period 1985 to 2010 as a whole is considered, but with different behavior for the 1998-2010 sub-period. The relative price effect is neutral, allowing the volume effects to dominate in setting the BoP constraint. The high income elasticities of exports enable growth in the advanced countries to have a multiplier effect on the Vietnamese economy. However, this effect is hindered by a high ‘appetite’ for imports coming from Asia. We also assess the impact of the current crisis on Vietnam’s growth for the period 2011 to 2017.

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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/11406.

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Date of creation: Jun 2013
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Publication status: Published in DIAL Document de travail, 2013
Handle: RePEc:dau:papers:123456789/11406

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Keywords: Economic growth; BoP constrained growth model; Multi country model; Asia; Vietnam;

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  13. Felipe, Jesus & McCombie, J. S. L. & Naqvi, Kaukab, 2009. "Is Pakistan’s Growth Rate Balance-of-Payments Constrained? Policies and Implications for Development and Growth," ADB Economics Working Paper Series 160, Asian Development Bank.
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