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Barcelona, Janzz Colleen A. 3ASN3 Cruz, Bernadine D. May 22, 2017 Vietnam: The Awakening Dragon
INTRODUCTION Considered as one of the rising tiger economies in Southeast Asia, Vietnam is one great story of an economic recovery. As one of the victims and a remnant of the Cold War, it faced drastic disasters and conflicts that left the country into pieces. The content of this paper circulates on Vietnam’s solution on poverty brought by the Indochina wars through the Doi Moi policy that revived the economy of Vietnam and to where Vietnam is today. It shall start off with the historical background on the downfall of Vietnam on the Indochina wars followed by its aftermath and the policies it implemented during its recovery process. We shall conclude the paper on how Vietnam is today and since the implementation of policies that alleviated the crisis after the Vietnam War or the Second Indochina war.
According to Alpha History (2016) the First Indochina War occurred from December 1946 to August 1954. On Vietnamese perspective, the First Indochina war circulated around the Viet Minh and French colonial forces fighting for the control of Vietnam. The Vietnamese also refers it to as the Anti-French War. The first Indochina war all began after the Japanese surrendered in 1945 and left Southeast Asia including Vietnam thus served as an opportunity for the Vietnamese to declare its independence on 2 September 1945. However when the Chinese and British troops were tasked to overlook the Japanese withdrawal, allowing the French to restore its colonial rule resulting to the said war. The Geneva Conference in 1954 marked an end on the First Indochina War. Several countries including Vietnam were present in Cairo, Egypt to discuss matters and thus came the withdrawal of the French troops in Vietnam leaving the country divided by the 17th Parallel; the North as a Communist state led by Ho Chih Minh in Hanoi and the South as a Democratic state led by Ngo Dinh Diem with the aid of the United States in Saigon. The Aftermath of the Geneva Conference did not come out good as protests against their leader, Ngo Dinh Diem from South Vietnam escalated due to the isolation of peasants, which gave the Viet Minhs living in the South, the chance of starting a revolution against the Diem regime. Thus, resulting to Communist insurgency attacking South Vietnam and thus, sparked the Second Indochina War or the Vietnam War. On the Second Indochina War occurred in 1965 was another devastating event that caused great damage to Vietnam. Just a few years after the Geneva accords, the Viet-congs or the Communist supporters under Ho Chih Minh, seized the capital of South Vietnam to oust the Americans and establish a Communist government (Foreign Policy Association, 1990). As stated by the Foreign Policy (1990) the U.S. troops carried out a bomb campaign in response to the attack of the Viet-congs, which caused massive destruction on infrastructures. Despite the Americans losing the war, this conflict resulted to high death rates and millions of casualties and infertile lands due to the chemical bombs used by the Americans leaving the country into a chemical wasteland. The locals paid a heavy price from colonization and foreign invasion. Although, majority of the damage caused the economic downfall of Vietnam would be from America’s use of chemical bombs that affected over 4 million citizens resulting to birth defects, disabilities that can be passed on from generation to generation, and infertile lands. In political sense, Vietnam was unified under a Communist government.
AFTERMATH The bloodshed conflict from 1945 to 1954 followed by 1965 to 1975 caused widespread poverty and famine in Vietnam leaving the country into a zero economy. In 1976, Vietnam under a Communist government pursued an isolationist policy and was ranked one of the poorest countries in the world (Hays, 2013). The citizens faced food shortages, inadequate jobs, and weak infrastructure resulting to poor production of commodity during the first decade after the war (Foreign Policy Association, 1990). After the Vietnam war, Socialist Vietnam created plans to uplift the economy of its country. First five years, Vietnam based their economy after China, which focused on light industries and agriculture (Hays, 2013). Hays (2013) also added that re-education camps were also established to “re-educate” the South Vietnamese. During the first decade, the Foreign Policy Association (1990) stated that the government of Vietnam was in favor of establishing a market-based economy, focused on three sectors namely: agriculture, handicraft products, seafood, rubber, coal – produced and exported to several communist states. In addition, Vietnam’s neighboring countries and Japan have shown interest to improve its oil deposits as well as other light industries including tourism. Aside from the said countries, Vietnam asked for economic assistance from International Groups such as World Bank, IMF, and the Asian Development Bank. Yet all this 10-year promise of a television set and a radio to every Vietnamese home, turned out to be a decade of bad luck (Hays, 2013) due to low incompetency and high rate of corruption.
RECOVERY In the early 1990’s, foreign investors went to Vietnam as they were having a bet on the Doi Moi economic policy of the communist nation, which was believed to be the next one making it in the Asian tiger economy. However, in the late 1990’s, they were withdrawing every single cent they had invested. Doi Moi literally translates to “renewal”, and was regarded as slow moving. In the past years, Vietnam had cautious policies with regard to reforms, which resulted to a specific outcome. Annually, the GDP growth has an average of 7 percent a year. Moreover, poverty and destitution has victimized two-thirds of the population. On a good note, the average income for Vietnamese has increased twice in the past decade. According to Victoria Kwakwa, the World Bank Country Director for Vietnam: “Stronger domestic demand, robust export performance, low inflation and improved confidence have enabled Vietnam to create firmer foundations for mid-term growth.” Moreover, she also stated “This is a good time to solidify macroeconomic stability and rebuild policy buffers including through decisive efforts to rein in fiscal imbalances and tackle remaining vulnerabilities in the banking sector.” (Kwakwa, 2015) On the other hand, according to the commentary of Bui Tat Thang: “Since the Vietnam War ended in 1975, the Vietnamese economy has entered a period of peaceful development. The current economic conditions are more favorable than at any time since the unification of the country, but, a quarter of a century later the Vietnamese economy still faces many challenges. On the one hand, these challenges include a miserable and backward economic situation, the result of a prolonged 30-year war that requires time and resources to repair.” (Thang, 2000) According to Taking Stock, the medium-term outlook for Vietnam remains positive, with growth projected to strengthen and inflation expected to remain low. However slow structural reform progress poses risks to medium-term growth prospects, while delays in implementing fiscal consolidation could undermine debt sustainability. Consequently, according to Klaus Rohland, the country representative for World Bank "Vietnam is a major success story. As of 1992 until now, they have grown on average, by more than 6 percent.” (Rohland, 2009)
VIETNAM TODAY Vietnam did not only make an utmost change in recovery for the global affairs. In the present-day, the country now has agreed with relations for 189 countries. Economists have said that Vietnam still has a long way to go before its economy can match its more developed neighboring countries. However, the government must further reform its banking and investment sectors - which now lend most of their funds to money-losing state-owned companies instead of private entrepreneurs.
Notwithstanding, even after the liberalization process, the Vietnamese government still maintains a great deal of control and influence exerting over major economic sectors through its overly involvement in large state-owned corporations and a range of other enterprises, comprising the banking system as well. In the year 2010, the state sector continued to account for about 36% of the Gross Domestic Product (GDP). To support the previous statement, Richard Rousseau, a contributor to the Diplomatic Courier said that “The Vietnamese authorities have reaffirmed their long-term commitment to economic liberalization, to international integration and the partial privatization of state enterprises yet the structural reforms necessary to truly modernize the economy are still lagging behind. Such reforms are vital for making Vietnamese industry more productive and profitable.” (Rousseau, 2011)
The reform process of Vietnam was known for a period of international integration and liberalization, through which the market economy had changed; in accordance to international regulations and standards as enhancement of the involvement to the global production networks, opening up to foreign investment and technology to act on its modernization activity. According to the World Bank, “Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower middle-income country.”
Ten years ago, a historical event that of Vietnam, took part of the World Trade Organization (WTO) following a long negotiation process. There were new opportunities and challenges substantiated by the international economic integration have had significant impacts on the economy. Furthermore, the growth in GDP was preserved at an unchanging rate even during the darkest time of the financial crisis and the global economic condition. The increase in GDP per capita also led to a quick expansion of the middle class. In a nutshell, upon getting admitted into the WTO, Vietnam was able to discuss reasonable preferential terms based upon regional and bilateral investment agreements, which resulted to further attracted foreign direct investments. Reality check, the contribution of productivity growth as the main operator of GDP expansion in the 1990s – has declined over the last ten years. As the growth of the labor force slows, the growth of labor productivity will definitely fall short on the growth rates Vietnam plans to succeed.
Hays, J. (2013). Vietnam After the Vietnam War. Retrieved May 16, 2017, from http://factsanddetails.com/southeast-asia/Vietnam/sub5_9a/entry-3369.html Johnson, K. (2009, October 29). Vietnam Enjoying Economic Recovery 30 Years After War. Retrieved May 16, 2017, from http://www.voanews.com/a/a-13-2005-04-29 -voa21-67384457/275063.html Thang, B. T. (n.d.). After the War: 25 Years of Economic Development in Vietnam. Retrieved May 16, 2017, from http://www.nira.or.jp/past/publ/review/2000spring/06thang.pdf Vietnam, Cambodia and the U.S. (n.d.). Retrieved May 16, 2017, from https://repository.library.georgetown.edu/bitstream/handle/10822/551442/ Vietnam_Cambodia.pdf?sequence Vietnam's Current Economic Situation and Future Prospects. (2011, July 20). Retrieved May 12, 2017, from http://www.diplomaticourier.com/vietnam-s -current-economic-situation-and-future-prospects/
Vietnam's Economic Recovery Firms up with A Positive Outlook. (n.d.). Retrieved May 11, 2017, from http://www.worldbank.org/en/news/press-release/ 2015/12/02/vietnams-economic-recovery-firms-up-with-a-positive-outlook
Wittner, L. (2015, May 18). The Vietnam War: After 40 Years. Retrieved May 18, 2017 from http://www.huffingtonpost.com/lawrence-wittner/ the-vietnam-war-after-40-_b_7308128.htmlonomy can match its more developed neighboring countries. However, the government must further reform its banking and investment sectors - which now lend most of their funds to money-losing state-owned companies instead of private entrepreneurs.
Notwithstanding, even after the liberalization process, the Vietnamese government still maintains a great deal of control and influence exer