In: Operations Management
Vietnam is a country undergoing transformation from a centrally planned socialist economy
to a system that is more market orientated. The transformation dates back to 1986, a decade
after the end of the Vietnam War that reunited the north and south of the country under
communist rule. At that time, Vietnam was one of the poorest countries in the world. Per
capita income stood at just $100 per person, poverty was endemic, price inflation exceeded
700 percent, and the Communist Party exercised tight control over most forms of economic
and political life. To compound matters, Vietnam struggled under a trade embargo imposed
by the United States after the end of the Vietnam War.
Recognizing that central planning and government ownership of the means of production
were not raising the living standards of the population, in 1986 the Communist Party
embarked upon the first of a series of reforms that, over the next two decades, transformed
much of the economy. Agricultural land was privatized and state farm collectives were
dismantled. As a result, farm productivity surged. Following this, rules restricting the
establishment of private enterprises were relaxed. Many price controls were removed. State-
owned enterprises were privatized. Barriers to foreign direct investment were lowered, and
Vietnam entered into trade agreements with its neighbors and its old enemy the United States,
culminating in the country joining the World Trade Organization in 2007.
The impact of these reforms has been dramatic. Vietnam achieved annual economic
growth rates of around 7 percent for the first 20 years of its reform program. Although
growth rates fell to 5 percent in the aftermath of the 2008–2009 global financial crisis, by
2015 Vietnam was once again achieving growth rates of around 6–7 percent. Living
standards have surged, with GDP per capita on a purchasing parity basis reaching $6,400 in
2016. The country is now a major exporter of textiles and agricultural products, with an
expanding electronics sector. State-owned enterprises now only account for 40 percent of
total output, down from a near monopoly in 1985. Moreover, with a population approaching
100 million and an average age of just 30, Vietnam is emerging as a potentially significant
market for consumer goods.
For all of this progress, significant problems still remain. The country is too dependent
upon exports of commodities, the prices of which can be very volatile. Vietnam’s remaining
state-owned enterprises are inefficient and burdened with high levels of debt. Rather than let
prices be set by market forces, the government has recently reintroduced some price controls.
On the political front, the Communist Party has maintained a tight grip on power, even as the
economy has transitioned to a market-based system. Vietnam bans all independent political
parties, labor unions, and human rights organizations. Government critics are routinely
harassed and can be arrested and detained for long periods without trial. The courts lack
independence and are used as a political tool by the Communist Party to punish critics. There
is no freedom of assembly or freedom of the press.
To compound matters, corruption is rampant in Vietnam. Transparency International, a
nongovernmental organization that evaluates countries based on perceptions of how corrupt
they are, ranks Vietnam 113th out of the 176 countries it ranks. Corruption is not a new
problem in Vietnam. There is a well-established tradition of public officials selling their
influence and favoring their families. However, critics say that the problem was exacerbated
by privatization processes that provided opportunities for government officials to appoint
themselves and family members as executives of formerly state-owned companies. Although
the ruling Communist Party has launched anticorruption initiatives, these seem to be largely
symbolic efforts. Many observers believe that widespread corruption has a negative impact
on new business formation and is hamstringing economic growth.
1: Why did Vietnam experience a low economic growth rate in the decade after the end
of the Vietnam War in 1976?
2: Vietnam now has an economy that is growing strongly with low unemployment and
rising living standards. What changes in economic policy have been responsible for this economic
transformation?
3: The level of public corruption in Vietnam is high. Why is this the case? How do you
think this affects Vietnam’s economic performance? What should the government do about this?
4: How do you think a shift toward more democratic institutions will affect economic
progress in Vietnam
Answer:-
1)
A decade after the Vietnam War started, which set up political life north and south of the nation. Truth be told, toward the finish of the war in Vietnam, the U.S. put an exchange ban on Vietnam.
The low per capita pay rates, the high joblessness rate.
2)
in 1986 the Communist Party left upon the first of a progression of changes that, throughout the following two decades, changed a great part of the economy. Rural land was privatized and state ranch aggregates were destroyed. Therefore, ranch profitability flooded.
Following this, rules limiting the foundation of private endeavors were loose. Many value controls were evacuated. State-claimed ventures were privatized. Boundaries to remote direct speculation were brought down, and Vietnam went into exchange concurrences with its neighbor.
3)
Vietnam bans all autonomous ideological groups, worker's guilds, and human rights associations. Government pundits are routinely irritated and can be captured and kept for extensive stretches without preliminary.
The courts need freedom and are utilized as a political device by the Communist Party to rebuff pundits. There is no opportunity of get together or opportunity of the press.
4)
Vietnam bans all free ideological groups, trade guilds, and human rights associations. Pundits of the administration are in effect continually irritated and might be kept or even captured for significant stretches of time without preliminary.
The courts need freedom and are utilized as a political device for the socialist party to rebuff any pundits. There is no opportunity of get together and nor opportunity of press.
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