Economics Development of Vietnam, Essay Example

Vietnam is a densely populated country, with a developing economy that is in transition to an open economy from 1986. In recent years, the authorities of the country reaffirmed the commitment to modernization. After almost completely destroyed during the Vietnam war, in the last twenty years the country recovered and expanded its most important sectors: agriculture, industry and mining. In January 2007 Vietnam accession to the World Trade Organization, which attracted industries more competitive and laps is prohibited.

Vietnam has a socialist market economy, with some characters similar to the economic model of the people’s Republic of China. Its gross domestic product has grown strongly in recent years, with an average of 8% per annum, during which has been reduced the poverty rate up to 12% of the population. Since the beginning of the economic crisis of 2008, the growth has been slow to around 6 %.

The economic resurgence began from the Doi moi, that was a set of reforms undertaken in 1986, simultaneously with the fall of the soviet bloc, and that accounted for the recognition of property and private initiative, the progressive opening up to foreign investment and trade openness.

With step leaders decided the Vietnamese communists launched a way very similar to that of their neighbors in China: a peculiar mixed economy called ‘socialist market system’ which assumes a chronic high inflation, with low wages and lack of freedoms. There was a dizzying privatization of state enterprises and gave entry to foreign capital. This audacious capitalist ‘spin’ was supported by two factors: first, the end of the American embargo in 1994; and then, the income of Vietnam in the International Trade Organization in 2007.

Although its spectacular economic growth has been slowed down in recent years by the international financial crisis, Vietnam boasts of having become the second most dynamic economy in Asia. Also is proud of the poverty reduction to less than 12% of the population (with a 2% of extreme poverty), while in 1994 amounted to 60 %.  That is to say that, within only 20 years, it has substantially improved the quality of life of some 25 million people.

But the social panorama of Vietnam presents so many shadows and lights there are in the statistical data on their macroeconomics. It is being achieved create employment for a workforce that increases in a million people each year. But the working class has lost rights and has extended the work piece. It has attained self-sufficiency in food and have multiplied the exports of rice and coffee. But the comprehensive crops deplete the land and since 1973 has been deforested over a surface area of 100,000 square kilometers.

The Vietnamese State controlled the banking system and the sector still represents 36% of GDP. But corruption has soared, settling in the civil service. The rates of tax fraud and customs are enormous. Bribery is a common practice and a good part of the country’s natural resources are disappearing from the government accounting. An anti-corruption law, enacted in 2005, it did almost nothing. But who is concerned about that? “Corruption is the bastard daughter of statism and capitalism”, is repeated with resignation in government circles.

The two big cities of Vietnam have changed face. In the south, Saigon has developed its former vocation mercantilist, and you have sprung the skyscrapers of glass you always dreamed about. In the north, the former Spartan Hanoi has been transformed into a modern city, open and playful. And it has more expensive until you reach the level of Tokyo but with much lower wages.

The official rhetoric continues talking about socialism. And a new breed of businessmen are listening in silence. There are many but very discreet. Although there are exceptions as glamourous as the entrepreneur coffee you Dang Nguyen Vu, the flamboyant billionaire that roams about alternating daily the different colors of its ten models of Ferrari and their five of Bentley. Forbes magazine estimates that he a personal fortune of $100 million. And they say that laughing all the way to laugh when someone asks ironically who won the long and bloody war in Vietnam. During the past twenty years, the Socialist Republic of Vietnam has stunned the world with a sustained economic growth and a prodigious reduction of poverty.

In just 20 years, the poverty rate has risen from 60% to 11% of the population, according to government data, but the gap between rich and poor increases, and the benefits of growth are just these communities, mostly isolated, which in many cases are still living like a century ago.

The findings presented in this report on the economy of Vietnam can demonstrate that the country is still in development. Considering their on-going poverty, it may take some more time for Vietnam to become a fully developed country from an economic perspective. Perhaps through foreign direct investments or FDI from more developed countries, Vietnam can speed up their economic development and help to reduce their poverty.