Vietnam - An Asian developing country in transition
Case study notes
| Doi Moi |
Thirty years of warfare from 1945 to 1975 imposed a great toll on Vietnam in terms of loss of life, injuries and enormous economic and social disruption. The economies of North and South Vietnam were quite different, the South operating according to market capitalism under a colonial structure, the North under non-market socialism based on Marxist-Leninist ideology. The re-unification of North and South Vietnam in 1975 provided the means for transforming a divided country with two very different economic systems, into one country with one economic system.
South Vietnam's capitalist economy was progressively transformed into a non-market socialist economy through nationalisation and collectivisation. Post re-unification, Vietnam experienced serious macroeconomic problems and the economy stagnated. Economic growth fell, hyperinflation occurred, food shortages were severe, agricultural production fell, and foreign savings and aid were heavily relied on.
In 1986, Vietnam's economy was in turmoil and the government decided to adopt economic reforms to improve economic development and living standards. The reform program was known as "Doi Moi" or renovation, and marked the beginning of the transition phase from a non-market to a market economy (with a social orientation) with the key goal being sustainable economic growth and the alleviation of poverty. However this has not been accompanied by a transition from socialism to capitalism, as state ownership of the means of production still predominates.
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