This paper examines the impact of the Hoa, an ethnically Chinese, economically
dominant minority, on regional economic development in Vietnam. To address the
endogeneity of the geographical distribution of the Hoa, we use an important
historical episode: the rapid deterioration in Sino-Vietnamese diplomatic relationship
that led many ethnic Chinese to flee abroad, particularly to the refugee camps in the
Guangxi province of China, in 1979. We find that the effects of proximity to the
refugee camps on the share of ethnic Chinese in 1989 were more pronounced for
provinces that had a larger presence of the ethnic Chinese population in 1979. We
also find strong correlations between the 1989 share of ethnic Chinese (instrumented)
and contemporary indicators of economic performance. The results suggest that the
ethnic Chinese minority had positive economic impacts on Vietnam’s regional
economies and that the post-Vietnam War exodus of ethnic Chinese was likely to
have had long-term negative economic impacts.