Table Of ContentVIETNAM'S REFORMS AND ECONOMIC GROWTH
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Vietnam's Reforms and
Economic Growth
Charles Harvie
Associate Professor of Economics
University ofWollongong
Australia
and
Tran Van Hoa
Associate Professor of Economics
University ofWollongong
Australia
First published in Great Britain 1997 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 978-1-349-40120-8 ISBN 978-0-230-38947-2 (eBook)
DOI 10.1057/9780230389472
First published in the Uniled States of America 1997 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
Library of Congress Cataloging-in-Publication Data
Harvie, Charles. 1954--
Vietnam's reforms and economic growth I Charles Harvie and Tran
Van Hoa.
p. em.
Includes bibliographical references and index.
I. Vietnam-Economic conditions. 2. Vietnam--Economic policy.
3. Economic forecasting-Vietnam. I. Tran. Van Hoa. II. Title.
HC444.H37 1997
338.9597---dc21 96-30026
CIP
--------·-------· ---
©Charles Harvie and Tran Van Hoa 1997
All rights reserved. No reproduction. copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with
written permission or in accordance with the provisions of the Copyright. Designs and
Patents Act 1988, or under the terms of any licence permilling limited copying issued by
the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE.
Any person who docs any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this work in
accordance with the Copyright, Designs and Patents Act 1988.
11tis book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 2
06 05 04 03 02 01 00 99
Charles Harvie
To my father, late mother, and sister, for their love
and support over many years
Tran Van Hoa
To dearest Souraya, Danielle and Cybele
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Contents
List of Tables ix
List of Figures xi
Acknowledgements xii
Preface xiii
1 Introduction 1
Background 1
Aims of the Book 3
Outline of the Book 4
2 Background to Vietnam's Economic Success 12
Introduction 12
Physical Setting 12
Population Characteristics 12
Social Indicators 16
Resource Endowment 20
The Environment 23
Transport Infrastructure 25
Summary 27
3 Vietnam's Economic Reforms and Transition to a
Market Economy 29
Introduction 29
Vietnam before Reunification 1945-1975 31
The Period of Macroeconomic Crisis 1976-1985 33
Economic Reform and Rapid Economic Progress 1986-Present 48
Summary 59
4 Macroeconomic Performance and Trends 61
Introduction 61
Sectoral Trends in the Economy 61
Macroeconomic Performance 1989-1995 65
Summary 76
5 East Asia: Alternative Economic Development Models 78
Introduction 78
Characteristics of the Successful East Asian Economies 79
East Asian Development Models 85
Key Ingredients of East Asia's Economic Success 93
Summary 102
viii Vietnam's Reforms and Economic Growth
6 Vietnam's Economic Development Strategy: Policies for
Sustained Growth 104
Introduction 104
Vietnam and other East Asian Economies - the Extent of the
Development Task 105
A Strategy for Economic Development 106
Economic Development - the Role of Government 119
Summary 134
7 Vietnam's Prospects to 2010 137
Introduction 137
The Government's Development Plan to the Year 2000 137
Major Obstacles to Achieving the Development Plan 141
Macroeconomic Performance to 2010 143
Sectoral Prospects 150
Australian Prospects in Vietnam 157
Summary 162
8 China and Vietnam in Transition: A Comparative Analysis
of Economic Reforms and their Outcomes 164
Introduction 164
A Comparison of the Respective Reform Programs of
Vietnam and China 165
Comparative Macroeconomic Performance of Vietnam
and China 174
Lessons from the Reform Process 188
Summary 195
9 Summary and Conclusions 197
Introduction 197
Background to Vietnam's Economic Success 197
Economic Reform Process 198
Macroeconomic Performance and Trends 199
East Asia: Alternative Economic Development Models 200
Vietnam's Economic Development: Policies for
Sustained Growth 202
Vietnam's Prospects to 2010 204
Vietnam and China's Comparative Transition Experiences 205
Notes 207
Bibliography 209
Index 225
List of Tables
3.1 State Investment in Industry, 1976-80 35
3.2 Gross Social Product (GSP), Second Five Year Plan 1976-80 37
3.3 Agricultural and Industrial Production 1976-85 38
3.4 Summary of State Budget Operations, 1976-85 42
3.5 External Trade, 1976-85 43
3.6 Vietnam's Economic Performance 46
3.7 Gross Social Product (GSP), Third Five Year Plan 1981-85 50
3.8 Vietnam: the Road to Reform 51
4.1 Gross Domestic Product, 1990-94 64
4.2 Gross Domestic Product: Growth by Sector 66
4.3 Savings and Investment (% of GDP) 67
4.4 Consumer Price Inflation (%) 68
4.5 State Budget (% of GDP) 69
4.6 Foreign Trade (US$m) 71
4.7 Main Trading Partners, 1993 (%) 71
4.8 Leading Exports (US$m) 72
4.9 The Current Account (US$m) 72
4.10 Exchange Rate (D:US$; period averages) 73
4.11 Foreign Direct Investment - Top Ten Countries
(as of 4 January 1995) 74
4.12 Foreign Direct Investment by Economic Activities
(as of 4 January 1995) 75
5.1 Growth Rate of Real GDP 81
5.2 Export Performance, Selected East Asian Economies, 1965-90 83
5.3 Growth Rate of Exports (Per cent per annum) 83
5.4 Investment and Savings (Per cent of GDP) 84
5.5 Inflation Rates, Selected HPAEs, 1961-91 97
6.1 Vietnam's Economy Compared with other East Asian
Economies, 1993 106
7.1 Development Plan - Basic Assumptions 138
7.2 Macroeconomic Indicators and Projections, 1994-98
(High Growth Scenario) 144
7.3 Scenario 1 - Rapid Industrialisation 146
7.4 Scenario 1 - Balance of Payments to 2005 (US$ Millions) 147
7.5 Development Indicators under Scenario 1 148
7.6 Scenario 2 - Slower Industrialisation 149
IX
