Vietnam

IN DECEMBER 1986, at the sixth National Congress of the Vietnamese Communist Party (VCP), the VCP started the economic reform program of doi moi, or renovation. This program was designed to reform the planned economy. The planned economic model had been applied to North Vietnam in 1954 and was expanded with much difficulty and against southern popular opposition after reunification in 1976. Doi moi was triggered by several intertwined domestic and international conditions: Vietnam's economy had been deteriorating since its reunification of 1976, and by the end of [Page 1136]the 1970s, Vietnam was facing economic collapse. The damage produced by the Vietnam War and a northern economy that was adjusted to wartime conditions posed worsening economic problems. In particular, Vietnam could not grow enough rice under the conditions of collectivization. Starvation became prevalent and Vietnam had to start rice imports. International problems exacerbated the domestic economic crisis: Vietnam's occupation of Cambodia from 1978 or 1979 until 1989 enforced the need for the government to finance an occupation force. This produced a diversion of funds to the military.

The international isolation resulting from the occupation meant the end of Western aid programs, and an economic dependence on the Soviet Union and its satellite states in the Council for Mutual Economic Assistance (COMECON, established 1949, disbanded 1991). In 1978, Vietnam concluded a friendship treaty with the Soviet Union (November) and became a member of the COMECON (June). Relations between Vietnam and China had already been on the decline since the beginnings of a U.S.-China rapprochement at the start of the 1970s (ping-pong diplomacy), which was targeted against the Soviet Union, and Vietnam's reunification. The short border war with China between February and March 1979 and China's military presence at the northern border since then diverted further funds to the military.

Mikhail Gorbachev's reform programs of perestroika and glasnost in the mid-1980s and the disintegration of the Soviet Union and the COMECON brought down Vietnam's economic and political support. As a result, Vietnam had to withdraw from Cambodia (by 1989) and seek rapprochement with China and the United States, and it embarked on a reform from the planned economy to the “market socialism” of doi moi. The model for Vietnam in the reform process is China.

In particular, Vietnam follows China in the idea of economic restructuring before privatization. This also means that political reform toward democratization makes only little steps at the local grassroots level but is absent in the national context.

In 1988, the government moved to recognize the household farm as the basic socioeconomic unit in rural areas. This meant to reinstate the responsibility of farmers and abandon the idea of agricultural cooperatives.

Particular emphasis is also placed on foreign direct investment and economic integration of the economy both in regional cooperation programs, such as the Asia-Pacific Economic Cooperation (APEC) and the ASEAN Free Trade Area (AFTA), and in the global economy through membership in the World Trade Organization (WTO). Vietnam endeavored to join the WTO by the end of 2005.

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