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The Economics of Natural Disasters in a Developing Country: The Case of Vietnam

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  • Ilan Noy

    () (Department of Economics, University of Hawaii at Manoa)

  • Tam Bang Vu

    () (College of Business and Economics, University of Hawaii at Hilo)

Abstract

We examine impact of natural disasters on annual output and output growth in Vietnam. Using provincial data for primary and secondary industries in Vietnam, we employ the Blundell-Bond System GMM procedure to estimate the impact of disasters on the macro-economy. Results show that more lethal disasters result in lower output growth but that more costly disasters (in terms of destroyed capital) actually appear to boost the economy in the short-run. This result is consistent with the ‘creative destruction’ hypothesis that we outline. However we find that disasters have different macroeconomic impact in different geographical regions; and these differences are potentially related to the ability to generate transfers from the central government.

Suggested Citation

  • Ilan Noy & Tam Bang Vu, 2009. "The Economics of Natural Disasters in a Developing Country: The Case of Vietnam," Working Papers 200903, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:200903
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    1. Carlos Adriàn Romero & Omar Osvaldo Chisari & Leonardo Javier Mastronardi & Arturo Leonardo Vásquez Cordano, 2015. "The cost of failing to prevent gas supply interruption: A CGE assessment for Peru," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2015(2), pages 131-148.
    2. van Bergeijk, P.A.G. & Lazzaroni, S., 2013. "Macroeconomics of natural disasters," ISS Working Papers - General Series 50075, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
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    10. Vu, Tam Bang & Noy, Ilan, 2013. "Natural disasters and firms in Vietnam," Working Paper Series 3063, Victoria University of Wellington, School of Economics and Finance.
    11. Arouri, Mohamed & Nguyen, Cuong & Youssef, Adel Ben, 2015. "Natural Disasters, Household Welfare, and Resilience: Evidence from Rural Vietnam," World Development, Elsevier, vol. 70(C), pages 59-77.
    12. Connie Bayudan-Dacuycuy & Lora Kryz Baje, 2017. "Intersecting Weather Variability And Chronic Food Poverty," Working Papers id:12307, eSocialSciences.
    13. Vu, Tam Bang & Noy, Ilan, 2013. "Regional Effects of Natural Disasters in China," Working Paper Series 2812, Victoria University of Wellington, School of Economics and Finance.
    14. Tam Vu & Ilan Noy, 2015. "Regional effects of natural disasters in China: investing in post-disaster recovery," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 75(2), pages 111-126, February.
    15. Mu, Jianhong & Chen, Yong, 2014. "Impacts of Natural Hazards on County-level Per Capita Income in the United States," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170202, Agricultural and Applied Economics Association.
    16. Dacuycuy, Connie B. & Baje, Lora Kryz, 2017. "Chronic Food Poverty in the Philippines," Discussion Papers DP 2017-25, Philippine Institute for Development Studies.
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    22. Hallegatte,Stephane & Bangalore,Mook & Jouanjean,Marie Agnes, 2016. "Higher losses and slower development in the absence of disaster risk management investments," Policy Research Working Paper Series 7632, The World Bank.
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    25. Connie Bayudan-Dacuycuy & Lora Baje, 2017. "Chronic and Transient Poverty and Weather Variability in the Philippines: Evidence Using Components Approach," Working Papers id:12072, eSocialSciences.

    More about this item

    Keywords

    Vietnam; natural disasters; 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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