This paper traces Vietnam's shift from post-reunification isolation toward economic globalization, beginning with the 1986 doi moi reforms that transformed rigid central planning into market-oriented policy. The analysis examines Vietnam's integration into international trade, its entry into ASEAN, and normalized relations with major trading partners. While acknowledging genuine poverty reduction and export growth, the paper critically evaluates globalization's uneven benefits, including the concentration of foreign direct investment in wealthy nations, structural economic inefficiencies exposed by the 1997 Asian financial crisis, and widening income inequality. The Bilateral Trade Agreement with the United States signals further market opening, yet concerns persist about Vietnam's capacity to sustain equitable development amid global economic pressures.
The victory of communist forces in Vietnam in April 1975 ranks as one of the most politically significant occurrences of the post-World War II era in Asia. The achievement was even more remarkable for having been accomplished in the face of determined United States opposition and for having challenged the very policy of containing communism. This occurrence marks a turning point not only in political but also economic facets of Vietnam. Although the communist government attempted to pursue an isolationist approach to economics, it has continually shifted toward an economically integrated market on the global stage.
The events of April 1975 prepared the way for the official reunification of North and South in 1976, some three decades after Ho Chi Minh first proclaimed Vietnam's independence under one government in September 1945 and more than a century after France divided Vietnam to rule its regions separately. Reunification represented the long-established objective of Ho Chi Minh's nationalist and anticolonialist predecessors, who had resisted Chinese rule for 1,000 years and French domination for a century. Vietnam's unrelenting resistance to foreign intervention remains a dominant theme in its history, visible in the repeated waging of dau tranh, or struggle to gain a long-term objective through total effort and motivated by chinh nghia, or just cause. Vietnam's communist leaders claim that every Vietnamese has been a soldier in this struggle.
Ironically, Vietnam's fierce determination to remain free of foreign domination has often been combined with an equally strong willingness to accept foreign influence. Historically, the pattern has been to adopt foreign ideas adapted to indigenous conditions whenever they applied. This set the stage for global efforts in balancing a country between public and private control over its economy.
In the 1980s, Vietnam ranked third in population—60 million—and first in population density—an average of 182 persons per square kilometer—among the world's communist nations. A 2 percent annual population growth rate and uneven population distribution adversely affected resource allocation, workforce composition, and land use. Population projections indicated a population of 80 million by the year 2000 if the growth rate remained unchanged. The Fourth National Party Congress in December 1976 stressed the need to curtail the population growth rate and introduced a plan to relocate 54 million people to 1 million hectares of previously uncultivated land, organized into "new economic zones," by the mid-1990s. As of 1988, however, progress toward the plan's fulfillment was considerably behind schedule.
Economic development prospects in Vietnam for the 1980s and 1990s were tied to party economic policy in critical ways. Party leaders, in establishing economic policy at the Fourth National Party Congress, envisioned Vietnam's post-reunification economy as being in a "period of transition to socialism." The plan, or series of plans, called for the economy to evolve through three phases. The first, outlining the objectives of the Second Five-Year Plan (1976–80), set extremely high goals for industrial and agricultural production while also prioritizing construction, reconstruction, and the integration of North and South. The second, entitled "socialist industrialization," was divided into two stages—from 1981 to 1990 and from 1991 to 2005. During these stages, the material and technical foundations of communism were to be constructed, and development plans were to focus equally on agriculture and industry. The third and final phase, covering the years from 2006 to 2010, was set aside to "perfect the transitional period."
In 1986, Vietnam made the decision to adopt a comprehensive reform program known in Vietnamese as doi moi. This led to a remarkable transformation of its socialist economy from rigid central planning to market orientation. Doi moi also led to a marked alteration in the pattern of Vietnam's external relations, which previously had been mainly confined to the socialist community. In 1987 and 1988, the Politburo of the Vietnam Communist Party (VCP) adopted two major resolutions, number two and number thirteen, that resulted in a strategic readjustment of Vietnam's defense posture and an "open door" policy in external relations. Troops were withdrawn from Cambodia and Laos in 1989. Vietnam also sought to diversify its foreign relations by "making friends with all countries."
Vietnam achieved remarkable results in attaining its economic and foreign policy goals. In the five years preceding the Asian financial crisis, its economy grew in excess of 8 percent each year. Vietnam also joined the Association of Southeast Asian Nations (ASEAN) and normalized its relations with China and the United States. Although external benefactors such as the World Bank and IMF urged Vietnam to continue its reform efforts, VCP leaders chose to proceed gradually.
When the Vietnamese government decided to move toward a more open and global market with a mix of public and private sectors, the results were virtually impossible to predict. As in other developing nations, the new global market produced a rapid boom. What was unknown to the Vietnamese, however, was whether the economy could continue on the path of growth and sustain this level indefinitely with a "multisectoral" approach.
Most of today's globalization debate centers around the assertion that globalization worsens poverty and that poor people do not benefit from it. However, if we examine the past 180 years, remarkable progress has been made. In 1820, 83 percent of the world's population earned less than $1 per day. By 1992, that number had declined to 23 percent. Looking at the latter part of the twentieth century alone, the evidence that globalization reduces poverty is substantial. On a wide range of measures—poverty, life expectancy, health, and education—more people have become better off at a faster pace in the past 60 years than ever before. According to the World Bank, trade enabled developing countries to grow at 4.3 percent per year during the 1990s, twice the rate of the developed world. Although Vietnam has not grown at the same level as other Asian nations such as the Philippines and Indonesia, its relatively slow growth rate has a better chance of sustaining its momentum and eventually achieving comparable GDPs.
Globalization allows for economic growth to continue within the developing country of Vietnam through many aspects. In developing countries, the labor-market side of this process tends to work in a positive direction. The increase in demand for poor-country labor ought to push up wages even for workers who are not employed in new trade-related jobs. Capitalism and globalization are not mainly concerned with shifting income from workers to investors, as some critics claim. Rather, the process makes some workers worse off while making others, even the poorest ones, better off. Overall, given freer trade, both rich country and poor country living standards rise, in turn giving governments more to spend on such programs as welfare, education, and other public services.
As with most economic implementations, globalization also has many negative aspects alongside the positive ones. A common misconception is that most, if not all, foreign direct investment transfers from rich countries to poor countries like Vietnam. In actuality, as of the late 1990s, 80 percent of FDI from rich countries goes to other rich countries. With the poorest countries, such as Vietnam, receiving only 1 percent of FDI from the United States, it is difficult to argue that globalization has made a profound impact on the economic circumstances of the Vietnamese. This misconception allows for the rich countries to get richer while the poor stay poor, hindering any assumption that FDI has a positive impact on developing nations.
The idea that outward FDI reduces the demand for labor in the sending country (the U.S.) and increases it in the receiving country (Vietnam) is also a false assumption. This assumption was based on the belief that when rich country firms invest in poor countries, rich country exports and jobs are replaced by poor country domestic production. However, evidence from the United States and other countries suggests that outward FDI does not displace exports; it creates them, in turn allowing America's exports to exceed its imports from countries such as Vietnam. The effects of this dynamic end up hurting the domestic economy of Vietnam rather than helping it.
Another alarming trend in the global community due to the gap between rich and poor countries falls within the realm of peace and stability. The region of wealthy countries shows a strengthening of republican order and economic growth with more liberal tolerance. On the other hand, regions of lower- and middle-income countries lack the capacity to govern effectively, and their power is eroding. When angry young people have access to information technologies that allow them to see people on television driving a Mercedes while they are unemployed or not being paid sufficiently, they foster a hatred for the wealthy countries that have supposedly brought them "riches." In reality, the "riches" or economic growth in these developing countries depletes them of natural capital and therefore any future potential as well. Migration to wealthy countries becomes the only means of salvation for many individuals in this situation.
Despite an impressive 23 percent rise in 1999's export performance to $11.5 billion, a sharp drop in new foreign investment commitments foreshadowed slower economic growth than Vietnam experienced in the early 1990s. Government control of the economy and a nonconvertible currency protected Vietnam from what could have been a more severe impact resulting from the East Asian financial crisis. Nonetheless, the crisis, coupled with the loss of momentum as the first round of economic reforms ran its course, exposed serious structural inefficiencies in Vietnam's economy.
Vietnam's economic stance following the East Asian recession has been a cautious one, emphasizing macroeconomic stability rather than growth. While the country has shifted toward a more market-oriented economy, the Vietnamese government still continues to hold a tight rein over major sectors of the economy, such as the banking system, state-owned enterprises, and areas of foreign trade. The July 13, 2000 signing of the Bilateral Trade Agreement (BTA) between the U.S. and Vietnam is a significant milestone for Vietnam's economy. Awaiting U.S. congressional approval, the BTA will provide for Normal Trade Relations status of Vietnamese goods in the U.S. marketplace. Right of entry to the U.S. market will allow Vietnam to hasten its transformation into a manufacturing-based, export-oriented economy. It would also concomitantly attract foreign investor interest back to Vietnam, not only from the U.S., but also from Europe, Asia, and other regions.
It is remarkable how unconcerned the World Bank, the IMF, and other global organizations are about negative globalization trends. The Bank's World Development Report for 2000 even stated that rising income inequality "should not be seen as negative" if incomes at the bottom do not fall and the number of people in poverty falls. Such lack of attention even from these so-called world organizations leads to the belief that the gap between rich and poor will continue to widen without concern for what is really happening to the state of developing countries. Wealthy countries will continue to extract natural capital from places such as Vietnam, leaving nothing for domestic sustainability.
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