Colin Barry

Vietnam / National Economic Strategy (MOC, Tuesday, Week 9)


Vietnam: remarkable growth since first moves away from centrally-planned economy in 1987. Will growth continue?

How a communist country maintained 7.7% GDP growth for 34 years (1986-2010):
-- Started out poor (ninth-poorest country in the world circa '86)
-- Favorable investment policies (allowed foreign ownership, opened to FDI, simplified permitting, EPZs, etc.)
-- Favorable macro policies (convertible currency [mostly], property rights, diplomatic normalization/"became a good citizen")
-- Cold War ends => can't rely on aid from Russia anymore (Counterpoint: start relying on aid from Western world...)
-- Riding wave of regional prosperity (neighbors grow even faster!)
-- Stable, centralized government
-- Consistent and slow privatization ("equitization")

Concerns moving forward:
-- Privatizing SOEs => Pace has been slow so far. Is it really necessary? Can government make it happen?
-- Bad higher education, bad infrastructure, etc.
-- Corrupt (sort of).
-- Inflation, real estate bubble (?), general macro worries.
-- Immature clusters.

===> Big takeaways <=== Social and economic policy are inextricably linked. Old-school guidance to developing nations -- implement Washington Consensus ASAP -- doesn't usually get implemented right/looks flawed. The European Union: whatever its failings, EU did an incredible job at getting tons of countries to enact economic/governance reforms. Required for membership!