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Curiosity, Economics

Vietnam: A Southeast Asian success story

Several decades ago, Vietnam was a war-torn Communist country struggling to get back on its feet.

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Updated: June 5, 2018

Today, it has one of the world’s fastest-growing economies.

The nation’s road to becoming a thriving lower-middle income country has been particularly bumpy. The First Indochina War saw the Viet Minh, a nationalist organisation under Ho Chi Minh, battle their colonial ruler, France, for independence. Not long after the first war ended, Vietnam found itself embroiled in a second conflict – this time between the Communist north and the US-backed south.

Though the fractured nation was reunified in 1975, it took its first major step towards economic prosperity with the implementation of a series of reforms under Nguyen Van Linh in 1986 which transformed the centrally planned economy into a market one.

The policies, known as Doi Moi, were introduced to combat a looming economic crisis brought on by skyrocketing inflation rates. By 1992, the country had adopted a new constitution promoting a more liberal economy – though the Communist party maintained a tight grip on power.

From there, the country began to further open up to the world, both joining Asean and normalising diplomatic ties with its erstwhile enemy the US in 1995.

In 1998, it joined APEC and in 2007, it became the 150th member of the World Trade Organisation.

Vietnam has also been part of TPP negotiations from the beginning and still stands to gain from the deal after the withdrawal of the US. The country has already seen benefits in the form of an increase in foreign direct investment, as Vo Tri Thanh points out in an article for Vietnam News.

Vietnam’s economic reforms have had a dramatic positive effect. Though the country experienced a slump in 1998 as the region was rocked by the Asian Financial Crisis, Vietnams growth has averaged 6.4 per cent per year since 2000 according to the Diplomat, catapulting the once-poor nation to lower middle-income status.

Vietnam’s economic success has impacted many aspects of society. According to a World Bank report, social services have greatly improved over the last 30 years. The population also has increased access to healthcare and education, with Vietnamese students performing surprisingly well in PISA, outperforming their counterparts in many OECD countries.

Infant and under five mortality rates have dropped dramatically between 1993-2012, with the former falling from 33 to 19 per thousand and the latter from 45 to 24 per thousand births.

Households also have better access to infrastructure and the gender gap has been steadily narrowing. The number of women in Vietnam’s work force is within 10 per cent of the number of males – one of relatively few countries with a gap so small – while in 2015 it was discovered that households headed by females were less likely to be poor than those under the control of men.

Still, the economic reforms have not been without their flaws. While Vietnam has largely benefitted from Doi Moi, the effects have not been felt evenly throughout the country and the gap between the rich and the poor has widened.

Still, the country’s growth is looking stable in the medium turn, according to a World Bank report. Growth is projected to stabilize around 6.5 percent.

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Nadia Chevroulet
About the Author: Nadia is an Associate Editor at Asia News Network.

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