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The economics of natural disasters in a developing country: The case of Vietnam

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  • Noy, Ilan
  • Vu, Tam Bang

Abstract

We examine the impact of natural disasters on annual output growth in Vietnam. Using provincial data for primary and secondary industries, we employ the Blundell-Bond General Method of Moments procedure to estimate the impact of disasters on the macroeconomy. We show that more lethal disasters result in lower output growth but that disasters that destroy more property and capital actually appear to boost the economy in the short-run. This is consistent with the 'investment-producing destruction' hypothesis that we outline. However, we find that disasters have a different macroeconomic impact in different geographical regions; these differences are potentially related to the ability to generate transfers from the Vietnamese central government.

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  • Noy, Ilan & Vu, Tam Bang, 2010. "The economics of natural disasters in a developing country: The case of Vietnam," Journal of Asian Economics, Elsevier, vol. 21(4), pages 345-354, August.
  • Handle: RePEc:eee:asieco:v:21:y:2010:i:4:p:345-354
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    Keywords

    Vietnam Natural disaster Growth Exogenous shocks;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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