VietnamVietnam

Transition from Socialism and Transition from Socialism and Awakening CapitalismAwakening Capitalism

• Over 82 million people but Over 82 million people but only 25 percent urbanonly 25 percent urban

• Population clusters in Population clusters in Mekong delta and Red River Mekong delta and Red River ValleyValley

• Ruled by China 1000 yearsRuled by China 1000 years• Conquest of Vietnam by Conquest of Vietnam by

France began in 1858 and was France began in 1858 and was completed by 1884. completed by 1884.

• Declared independence from Declared independence from France in 1945 culminating France in 1945 culminating victory in Dien Bien Phu in victory in Dien Bien Phu in 19541954

• Viet invasion of Cambodia Viet invasion of Cambodia 1978-79 brought isolation- 1978-79 brought isolation- dependence on Soviet Uniondependence on Soviet Union

• One of few surviving Leninist One of few surviving Leninist statesstates

People People

Structure of the EconomyStructure of the Economy

• Poor, densely-populated country forced to Poor, densely-populated country forced to recover from war, the loss of financial recover from war, the loss of financial support from the old Soviet Bloc, and the support from the old Soviet Bloc, and the rigidities of a centrally-planned economy rigidities of a centrally-planned economy

• 1997 Asian financial crisis highlighted 1997 Asian financial crisis highlighted problems but rather than reform, reaffirmed problems but rather than reform, reaffirmed the government's belief that shifting to a the government's belief that shifting to a market-oriented economy would lead to market-oriented economy would lead to disaster. GDP growth of 8.5% in 1997 fell to disaster. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999. 6% in 1998 and 5% in 1999.

• New leadership in 2001, Vietnamese have New leadership in 2001, Vietnamese have reaffirmed commitment to economic reaffirmed commitment to economic liberalization, implement structural reforms liberalization, implement structural reforms needed to modernize the economy and to needed to modernize the economy and to produce more competitive, export-driven produce more competitive, export-driven industries. industries.

Structure of the EconomyStructure of the Economy

• Agriculture 1994- Agriculture 1994- 67% 2004- 24%67% 2004- 24%

• Industry 1994-12% Industry 1994-12% 2004- 37% 2004- 37%

• Services 1994- 21% Services 1994- 21% 2004- 39% 2004- 39%

Agrarian Economy Gradually Agrarian Economy Gradually Transitions to IndustryTransitions to Industry

HanoiHanoi• Situated in the Red River Valley at confluence of Situated in the Red River Valley at confluence of

three rivers-easily defendedthree rivers-easily defended• Fertile soil for rice cultivation basis of food regimeFertile soil for rice cultivation basis of food regime• Captured by Han dynasty and endured 1000 years Captured by Han dynasty and endured 1000 years

of Chinese ruleof Chinese rule• 1111thth Century after Viet independence Thang Long Century after Viet independence Thang Long

capital and political focuscapital and political focus• But also commercial and manufacturing hub with But also commercial and manufacturing hub with

Red River outlet to South China SeaRed River outlet to South China Sea• Repeated Chinese incursions but in 1428 Chinese Repeated Chinese incursions but in 1428 Chinese

were pushed outwere pushed out• Viet Nam rapidly expanded south to the Mekong Viet Nam rapidly expanded south to the Mekong

delta and to the Gulf of Siamdelta and to the Gulf of Siam• Thang Long (Hanoi) took on character of an Thang Long (Hanoi) took on character of an

imperial city on the Chinese model imperial city on the Chinese model

HanoiHanoi• But by 17But by 17thth C Le dynasty power declined- noble C Le dynasty power declined- noble

families N&S dominatedfamilies N&S dominated• Expanses of cultivable land and climate more Expanses of cultivable land and climate more

favorable to agriculture, South took on new favorable to agriculture, South took on new charactercharacter

• Northern provinces highly traditional and inward Northern provinces highly traditional and inward looking- focus on wet ricelooking- focus on wet rice

• South with many tropical products became linked South with many tropical products became linked to major trade network to China, Japan and Koreato major trade network to China, Japan and Korea

• South became less traditional , more South became less traditional , more entrepreneurial, more prosperous and more in entrepreneurial, more prosperous and more in touch with outsidetouch with outside

• Cultural split between the two regions became Cultural split between the two regions became intensified and eventually would have impact intensified and eventually would have impact during colonial and Cold War erasduring colonial and Cold War eras

HanoiHanoiBuddhist Temple and Opera Buddhist Temple and Opera

House House

HanoiHanoi

Old Quarter- 36 StreetsOld Quarter- 36 Streets

• French colonists filled in French colonists filled in the canals to create a the canals to create a network of 36 narrow network of 36 narrow streets that quickly streets that quickly acquired the name of the acquired the name of the commodity traded there.commodity traded there.

• Bat Dan Wooden BowlsBat Dan Wooden Bowls• Bat Su China BowlsBat Su China Bowls• Cha Ca Roasted FishCha Ca Roasted Fish• Chan Cam String Chan Cam String

InstrumentsInstruments• Cho GaoRice MarketCho GaoRice Market• Hang Bac SilversmithsHang Bac Silversmiths• Hang Bong CottonHang Bong Cotton• Hang But BrushesHang But Brushes

Ho Chi Minh City-aka SaigonHo Chi Minh City-aka Saigon

• Economic heart of Economic heart of Viet Nam 1980> 3.4 Viet Nam 1980> 3.4 mil 2003> 5.7 mil mil 2003> 5.7 mil

• Entrepreneurial Entrepreneurial dynamismdynamism

• French colonial French colonial architecture architecture combined with new combined with new skyscrapersskyscrapers

• Main locus for Main locus for foreign investmentforeign investment

Economic Reform or Renovation:Economic Reform or Renovation:Doi MoiDoi Moi

• Dismantling of economic communes or Dismantling of economic communes or collectivescollectives

• Reallocation of land use for family farmsReallocation of land use for family farms• Opening country to foreign direct Opening country to foreign direct

investment- recognize value of market investment- recognize value of market mechanismmechanism

• Reform of banking sectorReform of banking sector• Establish real interest rates>>>SavingsEstablish real interest rates>>>Savings• Direct subsidies to State Owned Enterprises Direct subsidies to State Owned Enterprises

(SOEs) ended(SOEs) ended

Development Strategies and Development Strategies and ProblemsProblems

• Since 1987 New Economic Zones established to Since 1987 New Economic Zones established to redirect and resettle migrants to rural areas from redirect and resettle migrants to rural areas from cities- land in highlands- limited successcities- land in highlands- limited success

• Unprofitable state enterprises cut loose- no longer Unprofitable state enterprises cut loose- no longer restricted by govt set prices and quotasrestricted by govt set prices and quotas

• Encourage foreign capital and investmentEncourage foreign capital and investment• Encouragement of entrepreneurship allowing private Encouragement of entrepreneurship allowing private

business to operatebusiness to operate• Mekong River Commission – designed to support joint Mekong River Commission – designed to support joint

activities among Indochinese states- harnessing river activities among Indochinese states- harnessing river for power, navigation, flood control, fishing and for power, navigation, flood control, fishing and tourismtourism

• Greater Mekong Sub region- infrastructure Greater Mekong Sub region- infrastructure improvements needed to integrate several economiesimprovements needed to integrate several economies