Vietnam Transition from Socialism and Awakening Capitalism Over

Vietnam Transition from Socialism and Awakening Capitalism

• Over 82 million people but only 25 percent urban • Population clusters in Mekong delta and Red River Valley • Ruled by China 1000 years • Conquest of Vietnam by France began in 1858 and was completed by 1884. • Declared independence from France in 1945 culminating victory in Dien Bien Phu in 1954 • Viet invasion of Cambodia 1978 -79 brought isolationdependence on Soviet Union • One of few surviving Leninist states

People

Structure of the Economy • Poor, densely-populated country forced to recover from war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally-planned economy • 1997 Asian financial crisis highlighted problems but rather than reform, reaffirmed the government's belief that shifting to a market-oriented economy would lead to disaster. GDP growth of 8. 5% in 1997 fell to 6% in 1998 and 5% in 1999. • New leadership in 2001, Vietnamese have reaffirmed commitment to economic liberalization, implement structural reforms needed to modernize the economy and to produce more competitive, export-driven industries.

Structure of the Economy • Agriculture 1994 - 67% 2004 - 24% • Industry 1994 -12% 2004 - 37% • Services 1994 - 21% 2004 - 39%

Agrarian Economy Gradually Transitions to Industry

Hanoi • Situated in the Red River Valley at confluence of three rivers-easily defended • Fertile soil for rice cultivation basis of food regime • Captured by Han dynasty and endured 1000 years of Chinese rule • 11 th Century after Viet independence Thang Long capital and political focus • But also commercial and manufacturing hub with Red River outlet to South China Sea • Repeated Chinese incursions but in 1428 Chinese were pushed out • Viet Nam rapidly expanded south to the Mekong delta and to the Gulf of Siam • Thang Long (Hanoi) took on character of an imperial city on the Chinese model

Hanoi • But by 17 th C Le dynasty power declined- noble families N&S dominated • Expanses of cultivable land climate more favorable to agriculture, South took on new character • Northern provinces highly traditional and inward lookingfocus on wet rice • South with many tropical products became linked to major trade network to China, Japan and Korea • South became less traditional , more entrepreneurial, more prosperous and more in touch with outside • Cultural split between the two regions became intensified and eventually would have impact during colonial and Cold War eras

Hanoi Buddhist Temple and Opera House

Hanoi

• French colonists filled in Oldthe. Quarter 36 Streets canals to create a network of 36 narrow streets that quickly acquired the name of the commodity traded there. • Bat Dan Wooden Bowls • Bat Su China Bowls • Cha Ca Roasted Fish • Chan Cam String Instruments • Cho Gao. Rice Market • Hang Bac Silversmiths • Hang Bong Cotton • Hang But Brushes

Ho Chi Minh City-aka Saigon • Economic heart of • • • Viet Nam 1980> 3. 4 mil 2003> 5. 7 mil Entrepreneurial dynamism French colonial architecture combined with new skyscrapers Main locus foreign investment

Economic Reform or Renovation: Doi Moi • Dismantling of economic communes or collectives • Reallocation of land use for family farms • Opening country to foreign direct investmentrecognize value of market mechanism • Reform of banking sector • Establish real interest rates>>>Savings • Direct subsidies to State Owned Enterprises (SOEs) ended

Development Strategies and Problems • Since 1987 New Economic Zones established to redirect and resettle migrants to rural areas from cities - land in highlands- limited success • Unprofitable state enterprises cut loose- no longer restricted by govt set prices and quotas • Encourage foreign capital and investment • Encouragement of entrepreneurship allowing private business to operate • Mekong River Commission – designed to support joint activities among Indochinese states- harnessing river for power, navigation, flood control, fishing and tourism • Greater Mekong Sub region- infrastructure improvements needed to integrate several economies