Vietnam's Economic Transition

Topics: Vietnam, Economic system, Planned economy Pages: 2 (354 words) Published: April 21, 2013

VIETNAM – Transition throughout the years

Vietnam was conquered by France in 1884 and became part of French Indochina in 1887. It was declared independent after World War II, but still ruled by France until 1954; eventually dividing into Communist North and anti-Communist South (led by the Americans).

Planned Economy:
In 1975 North Vietnam overran the South, and reuniting Vietnam under the Communist rule. This is technically the first transition of the economy. The Communist party created 5-year plans to dictate the economy => Planned Economy * Government decided what to produce, how to produce and for whom to produce. * This can be seen by the Second five-year plan (1976-1981) and Third five-year plan (1981-1986) * Resources are allocated equally to the people

Transition period
* Why?
* Both the 5-year plans had failed. The main reason being that Vietnam had set such extraordinarily high goals. * Theoretically it is impossible for any government to successfully plan the economy. * The Government implemented “Doi Moi” Policy (Renewal Campaign) in 1986, wanting to convert Vietnam from a planned economy to a free-market economy. * Difficulties:

* Relationship between Vietnam and Soviet Union
* Poor equipment and little capital
* Lack of ability to control inflation
* Suffocating bureaucracy

Current situation
Originally the “Doi Moi” Policy was to convert Vietnam into a free-market economy. But in 1990 the VCP (Vietnam Communist Party) published a new plan “The Draft Strategy for Socio-Economic Stabilization and Development up to the year 2000” that changed Vietnam’s economy, which was on its way to becoming a free market, to a Socialist-oriented market economy. * Government is still the main factor of the economy.

* It is a mixed economy, which follows the...
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