Economic Development of Vietnam, Research Paper Example

Directly south of China, Vietnam is located in the southern and eastern part of the Indochinese peninsula in Southeast Asia along the coast of the South China Sea. Laos and Cambodia are west of Vietnam on the peninsula, and the Mekong River delta lies south of Vietnam. Vietnam is narrow and long on a north-south axis, and its size is approximately twice as large as the state of Arizona.   In November of 2006, the international community officially recognized Vietnam as the 150th member of the World Trade Organization (WTO). It has the second fastest growing economy in China, and it has been predicted that it will become the seventeenth largest economy in the world by 2025. The Vietnamese people have conveyed a strong will to succeed in every arena despite the fact that colonization hampered its autonomy, self-sufficiency, and economic development until the 1970s.

Vietnam’s economic is categorized as a market economy and a developing planned economy.  Beginning in the 1980s, an epoch of reform known as the Doi Moi reform era, Vietnam’s economy shifted from centralized, planned economy to a market economy that was more socialist-oriented and utilized both indicative and directive planning. The Five Year Plans of Vietnam spurred on great economic growth. Currently, Vietnam is slowly becoming integrated into the global economy due to the exigencies wrought by macro processes associated with globalization. The majority of Vietnamese economic enterprises are small and medium in size. Vietnam is currently one of the world’s leading agricultural exporter and remains an alluring locale for foreign investment in the developing world despite the fact that it remains a communist government. Vietnam’s planned economy lost traction for sustainable growth and productivity in the same way that the majority of Communist economies around the world did in the epoch following the Cold War.  Vietnam currently depends on foreign direct investment in order to lure overseas capital in order to bolster its persistent economic level of vigor. Despite the various economic achievements Vietnam witnessed during the Doi Moi reforms, various issues have persisted, prompting many researchers and analysts to express concern over the economic slowdown that has recently taken place.

Vietnam has been a one-party communist state since the mid-1970s, yet the government has loosened various restrictions placed on private enterprise and sold off the majority of its state-owned enterprises (SOE) to an eager public. For ideological purposes, the offering of SOEs is referred to as “equitizations” rather than “privatizations.” The Doi Moi Reforms in 1986 yielded positive results in the economic sector, as the stock market index surged by a hundred and forty five percent by the year 2006, and in the first few months of 2007, it rose another sixty percent. Because the country faces a hot stock market, the Vietnamese authorities have made efforts to cool off the stock market without dampening foreign investment. One of the main reasons that the market has gained momentum is because of the sale of SOEs at an extremely slow pace as well as the limitations placed on non-governmental investors once that SOEs are equitized. The State Securities Commission–a branch of the Ministry of Finance–supervises and manages the securities market in Vietnam. In June 2006, a Law on Securities was passed to aid securities market development at a sustainable level. This policy encompassed the listing and trading of securities; the role the State played in the inspection and administration of securities; securities offered to the public; and how trading markets are organized, among other important realms.  As a result, a bull market has persisted in Vietnam.

In the year 2013, the nominal GDP of Vietnam’s economy climaxed as 170.565 billion U.S. dollars, with a nominal GDP per capita  of approximately $1902 U.S. dollars. At the end of 2005, Goldman Sachs forecasted that Vietnam’s economy would become the thirty-fifth largest economy globally with a nominal GDP totaling over $436 billion U.S. dollars and a nominal GDP per capita of $4,357 U.S. dollars by the year 2020. Pricewaterhouse Coopers predicted in 2008 that Vietnam would become the fastest-growing economy in the world by 2020 with a potential growth rate of 10% annually, which would result in the economy growing by 70% of the British economy by the year 2040.

Although Vietnam has passed through significant economic and legal reforms, Vietnam still does not boast a rule of law, a phrase usually only used in the United Kingdom, the United States, and other First World countries. Although a litany of new laws and reforms have been enacted, the issue of enforcement remains problematic, especially because Vietnam remains a one-party communist state. Vietnamese judges lack the necessary training to adjudicate cases within the economic arena. Vietnam continues to develop its stock market along the same lines that China did in the creation of its stock market. Moreover, Vietnam has emulated other Asian models for its capital stock investment, which has spawned great success. It remains to be seen whether or not Vietnam’s efforts to establish a liquid stock market in order to draw in foreign and domestic capital is successful in further developing its economy. Nonetheless, Vietnam’s efforts for equitization will be interesting to keep track of in terms of the fruit they bear.