Disasters bite less deeply, but they do not stop biting: four decades of structural transformation and disaster sensitivity in Vietnam

Comparable levels of realised disaster impact were associated with substantially smaller macroeconomic losses after Vietnam's late-1990s development transition—not because the available meteorological indicators became systematically weaker, but as the economic transmission of realised impacts changed. This paper examines how the relationship between natural disaster impacts and macroeconomic losses evolves as economies develop. Using annual data for Vietnam from 1986 to 2025, we construct a multidimensional Natural Disaster Impact Index (NDII), positioned within the hazard–exposure–vulnerability framework, that captures realised physical and social damage across four dimensions. Hansen's threshold regression identifies a statistically significant transition around 1999, coinciding with agriculture's share of GDP declining to approximately one-quarter and a broader period of industrialisation and international integration. Beyond this threshold, the estimated marginal association between disaster impacts and economic losses is roughly half its earlier magnitude. The attenuation is considerably larger for economic damage than for social damage, while agricultural share independently reproduces the transition and significantly conditions disaster sensitivity. These patterns provide stronger support for structural transformation than for institutional adaptation or financial buffering alone. Purely meteorological indicators produce no comparable threshold, making a hazard-only explanation less consistent with the evidence. The findings show how structural transformation can reorganise the transmission of disaster impacts without eliminating the exposure accompanying continued development.