The Oxford Handbook of International Business

considered here. The country is very large, both in extent and population, having 81 million people. Centuries of earlier autonomy left it with a very strong sense of national identity, but the decades of war against the Japanese, then the French, then the US, left the country weak and still psychologically divided. As with most totalitarian states the instruments of control are many, sophisticated, and deep in their penetration, and while Vietnam continues to talk about opening up and encouraging capitalist activity it continues to frustrate the business person with rules, regulations, and unpredictably changing controls.

The end result is that small business, operating close to the ground, and left to its own devices, can survive and even prosper. Businesses at larger scale have to navigate the world of political approval. Investors going in from advanced countries have had mixed experiences in recent years, and progress in opening the country to world trade and competition is slow. Income per capita is the lowest among the major countries of the region at US $400.

There is a strong sense among many observers of Vietnam that the country is at the same position China was at in the 1970s prior to the Deng Xiao Ping reforms of 1979. Freedom of economic behaviour in China was achieved by a process of decentralization and loosening of control. It was done slowly and is still far from complete, but there was at least an official endorsing of 'the glory of being rich', and private ownership expanded in line with the decline of the state sector. This same direction is being followed much more hesitantly in Vietnam and with much less clarity of endorsement from the very top. Instead policy is fought over between the liberals and the hard liners, and the truce line between them shifts constantly. The retention of power by party members drives much behaviour and the likelihood of fast progress is low.

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