Academic journal article The Geographical Review

Doi Moi Policy and the Small-Enterprise Boom in Ho Chi Minh City, Vietnam

Academic journal article The Geographical Review

Doi Moi Policy and the Small-Enterprise Boom in Ho Chi Minh City, Vietnam

Article excerpt

For more than a decade after North and South Vietnam were reunified in 1975, the ruling Communist Party attempted to implement throughout the country the socialist precepts of Marxism-Leninism that had been applied in the North since the defeat of the French colonial forces in 1954. But in mid-1985, in a sudden and surprising policy reversal, the Communist Party's Central Committee proposed an economic blueprint called Doi Moi (literally, Renovation), which aimed to reform the economy completely and to lead Vietnam rapidly toward market capitalism.

The main goals of Doi Moi were to improve lagging productivity, to raise living standards, and to curb rapid inflation, which reached almost 500 percent a year in the mid-1980s (Kimura 1993, 51). The strategy would reestablish a multisector economy driven by private enterprise under government supervision. It sought to increase foreign investment, curtailed during the United Nations embargo that followed the Vietnamese invasion of neighboring Cambodia in 1978-1979. The government hoped its reforms would end isolationism by expanding external trade and commercial relations. This bold reversal of strategy, almost unprecedented among Marxist nations at the time, was ratified by the Sixth Party Congress in 1986, making Vietnam one of the first Soviet Bloc nations to formally "take the capitalist road."

Shortly after the Doi Moi policy was announced, economic indicators revealed a spurt of growth in the Vietnamese economy (Table I). Most economists, historians, and political scientists who have analyzed the postreform period in Vietnam, as Adam Fforde and Stefan de Vylder (1996, 246) cogently point out, have taken a topdown approach, crediting Doi Moi with having created the growth spurt. Studies that hypothesize a catalytic role for the Vietnamese Communist Party in generating economic change are usually based on interpretations of official national statistics and the pronouncements of major political figures (Vo 1990; Than and Tan 1993; Vu 1994; Do 1995), rather than on a dose geographical, historical, and sectoral study of the economy itself. Some analysts (Perkins 1993, 9; Sachs and Woo 1994, 274) characterize [TABULAR DATA FOR TABLE I OMITTED] Doi Moi as a "big-bang" economic liberalization that almost overnight transformed a stagnant peasant economy into a vibrant, market-driven, capitalist system. These studies give the impression that the dramatic commercial expansion and diversification in Vietnam in the late 1980s were the consequences of a central-government fiat.

Closer scrutiny of relationships and events in the regional economies of Vietnam, both before and after Doi Moi, casts doubt on the "big-bang" thesis. The dramatic commercial expansion initially bypassed the industrial and political heartland around Hanoi, focusing instead on Ho Chi Minh City and its immediate hinterland, where the petty-enterprise sector experienced almost unprecedented boom conditions (Vokes 1995, 312). This apparent, sudden swelling of the ranks of petty entrepreneurs, whose output is rarely measured in official statistics, gave the impression that this sector had also been created de novo by the Doi Moi policy. Dwight Perkins, for example, pictures the small-enterprise sector as dependent on Hanoi's market reform (1993, 11). But this leaves unanswered the question of why the expansion did not initially diffuse from Hanoi.

Although the informal sector in Vietnam has received little explicit attention from those who adopt either a bottom-up or a top-down approach to the transformation, the prevailing policy-centered attitude toward it is perhaps most dearly expressed by Richard Stubbs (1989, 51): "[A]fter the Sixth Party Congress . . . the emphasis has been on renovating the mechanisms of economic management. . . . There have also been major efforts to provide new incentives and marketing opportunities which have produced a boom in local markets and the emergence of 'street front capitalism' in urban areas. …

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