From Plan to Market: The Economic Transition in Vietnam

From Plan to Market: The Economic Transition in Vietnam

From Plan to Market: The Economic Transition in Vietnam

From Plan to Market: The Economic Transition in Vietnam

Synopsis

This clear and accessible text explores Vietnam's successful transition from neo-Stalinist central planning to a market economy- "Vietnamese style." After describing the north Vietnamese system prior to 1975 and its colonial and pre-colonial antecedents, the authors uncover the mechanisms of that changeover. They contend that the Vietnamese transition was largely bottom-up in character and that it evolved over a long enough period for the country's political economy to adjust. This explains in part the rapid shift to a high-growth, externally oriented development path in the early 1990s, despite the loss of Soviet aid and the lack of significant Western substitutes until 1992–1993. Based upon extensive in-country experience, a wealth of primary materials, and wide comparative knowledge of development issues, the book challenges many preconceived notions, both about Vietnam and about the general nature of transition processes.

Excerpt

Vietnamese history since national reunification in 1975-1976 has an air of high drama, and deservedly so, in our opinion. After decades of war and struggle, Vietnam set off along a path that was to encompass neoStalinism and economic failure. This failure meant that Vietnam "lost" some fifteen years in its attempt to catch up with the rapidly growing countries of East Asia. The relatively egalitarian income distribution and rather advanced welfare services of the traditional development model mitigated, but could not compensate for, the lack of dynamic accumulation. Widespread hunger and poverty therefore continued. During these years, the Vietnamese people also endured the social consequences of neoStalinism, through which they were isolated from the outside world and had their freedoms greatly curtailed. During the decade after 1975, Vietnam thus endured a second tragedy to follow the sorrows of war. For this, the political leadership, as in any country, must bear much of the blame, and in this regard reference will inevitably be made to the wartime party leader, Le Duan, who remained in power until he died in 1986.

Yet if this was Act One, then Act Two was rather different. There was little apparent conscious intent to reform the system into extinction, when change started in the very late 1970s, and it created a sufficient head of political and economic steam for national political leaders in 1985-86 to herald the introduction of doi moi, the Vietnamese slogan for "reform." By 1989, we argue, Vietnam possessed the essential characteristics of a market economy, and by 1994-95 sharp increases in savings supported by large inflows of FDI (foreign direct investment) were financing GDP (gross domestic product) growth rates near 8-10 percent annually. The chronic hunger that had faced the Vietnamese living in the high population density regions of the North and North-center had eased and seemed set to ease further. However, wide income gaps, corruption, and "social ills" also accompanied the shift to a market economy. Under Party General Secretary Nguyen Van Linh (1986-1992), Vietnam enjoyed de-Stalinization, followed by a partial reversal as the party rejected political pluralism. However, by the mid-1990s the high level of tension that had marked . . .

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