Question

QUESTION 1 (25)
With few exceptions, general discussions with policy-makers and researchers in Viet Nam have focused on a perception of declining growth potential for the economy. The explanations given for this decline are a weak financial sector burdened with non-performing loans and failure by the Government to restructure state-owned enterprises. The argument concludes that if these structural obstacles were to be overcome, further export growth would be the driving force for higher growth rates.
1.1 In the context of the given extract, critically discuss the THREE (3) reasons for the declining growth potential for the economy of Viet Nam and recommend the policy options that can be used to stimulate economic growth. (15)
1.2 Discuss ANY FIVE (5) social costs of growth to an economy as evidenced by the performance of China over the past 20 years. (10)

Answer 1

1.1) The exonomy of Vietnam, although on the recovery stage, has seen declining trends of growth in the recent years. The following may be seen as the major reasons for the same

• As it is being given in the statement, the banking sector has been stalled by rising bad loans and the realtes issues combined with the domestic banking failures have been disadvantageous to the economy of vietnam
• The trade defocit and the inflation induced by the rising growth of the nation caused a lot of pressure on the currency of Vietnam thereby stalling the internal economy and the international trade.
• Although an emerging economy, the service sector has failed to meet the expectations of the sector and the rising deficit combined with the domestic vulnerabilities and external risks have caused failures in the economy of Vietnam

Considering the above failures in the economy, the current economy has improved lot. The primary measure to be taken in rebuilding the economy would be to stabilise the banking and the related financial sector. The service sector has to be remodified to meet the atandards of the economy and thus could improve the trade benefits of the nation

1.2) The following are rhe major social costa to the growth of ab economy which means the cost the economy has to bear as a result of actions of the residents of economy taking in to consideration the story of China in the recent years

• The social cost of smoking is so high as it results in more air pollution nd related effects in the economy.
• The social cost of maintaining the traffic and law and order in the state is also high as it involves a lot of manpower to make it happen.
• The social cost of maintaining an army has been seen in case if China for particular as they maintain one of the biggest army in the world.
• The social cost of public industries and public transport has also been an important component in the economy of China as it has been contributing to a good share of the budget of Chinese economy
• The social cost of innovation industry has caused an increase in all pollution cases for the nation in the past years and it has been evident from the economy of China.

The above are the major social costs that have to be born by the economy of a nation with special focus in Chinese econony in the recent past.