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Economic growth and balance of payments constraint in Vietnam

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Author Info

  • A. Bagnai

    (Department of Economics, University ‘Gabriele D’Annunzio’, Chieti, Italy)

  • A. Rieber

    (Department of Economics, University of Rouen, France)

  • T.A.D. Tran

    (DIAL, Institute of Research for Development, Vietnam)

Abstract

Our paper examines the long run relationship in Vietnam 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 Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 13.

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Length: 39 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:dpc:wpaper:1313

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

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  1. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2009. "Trade and Development: Lessons from Vietnam's Past Trade Agreements," World Development, Elsevier, vol. 37(2), pages 341-353, February.
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  12. Faini, Riccardo & Clavijo, Fernando & Senhadji-Semlali, Abdel, 1992. "The fallacy of composition argument : Is it relevant for LDCs' manufactures exports?," European Economic Review, Elsevier, vol. 36(4), pages 865-882, May.
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