Abstract
Vietnam and China both are quickly emerging market economies in Asia. China has had an unprecedented economic growth in Asia for the past 30 years. Also, Vietnam’s GDP is increasing, but more slowly. However, Vietnam is starting to catch up. Against this background, this article assesses the question what the economic and environmental impacts in Vietnam would be, if the country followed China’s development path. Based on econometric analysis, it is shown that currently, Vietnam is lagging behind China in terms of economic growth for 11 years. Although Vietnam and China have a similar primary energy mix in the early 1980s, China is still massively relying on coal, whereas Vietnam starts to develop hydro power in the late 1980s on large scale. Due to a quick growth of per-capita income, per capita emissions in China are already catching up with those of North-European economies such as Denmark, Finland and Germany. The question arises, what if Vietnam followed China’s development path. Using econometric models of GDP and CO2-emissions, two scenarios for Vietnam are analyzed, a scenario following China’s development path and one alternative scenario pursuing the current development patterns until 2050. The results show that the additional impact of following China’s economic development path is minor. Vietnam would only have a 0.5% percentage point per annum higher GDP growth. In other words, Vietnam would grow relatively quickly anyway. However, following China’s development path also in terms of high CO2-emissions per capita, would increase the growth of CO2-emissions in Vietnam by 2.3 percentage points per annum and would lead to an increase of CO2-emissions in 2050 by 2.6 bn. tons compared with the scenario in which Vietnam sticks to its own development patterns. However, in that case, Vietnam also had a 25% lower per capita income compared with the scenario following China’s development path. Here, the people and government in Vietnam have to make a strategic choice.
Highlights
Vietnam and China are quickly growing and emerging market economies with increasing economic welfare in terms of growing disposable per-capita income [1]
The results show that the additional impact of following China’s economic development path is minor
How many years Vietnam is lagging behind China in terms of its economic development, a simple regression of GDP per capita in Vietnam (GDP_POP_VNt) on GDP per capita in China (GDP_POP_CHt−n) for different time lags (Ln = t − n) is performed using an ordinary least squares (OLS) estimator
Summary
Vietnam and China are quickly growing and emerging market economies with increasing economic welfare in terms of growing disposable per-capita income [1]. E.g. its trade with Germany— starting from a low level—has reached the highest growth in Asia [6] Against this background, research has been done and published on whether Vietnam could follow China’s footsteps and join the group of emerging countries in Asia in a third wave In order to answer these questions, an econometric analysis of Vietnam’s and China’s development paths is undertaken (Section 2), analyzing how many years Vietnam is lagging behind China economically. Based on the results of this analysis, a forecast of Vietnam’s GDP, CO2-emissions and CO2-intensities per capita and GDP is made until 2050, if Vietnam followed China’s development path compared with a scenario with autonomous economic development patterns.
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