[Rei Murasame]

Would any of you consider the Vietnam that exists today to be a country worth examining to see how a developing economy - with many SOEs - in a cash-strapped environment fares, and what sort of problems they have to deal with?

I've been wondering if there's any lessons on 'what to do' and 'what not to do', worth gleaning from the Vietnamese experience since 2003, that might be helpful to us.

Any thoughts on this?

[Figlio di Moros]

Not familar with Vietnam, beyond the failure of the Tet offensive.

Also, Rei.....

[Rei Murasame]

Well, I mean post-2003. Not as a historical thing.

Also, welcome back Figlio!

[Daktoria]

Yes, welcome back Fig.

Anyway, no.

http://www.google.com/publicdata/explor ... onSize=0.5

Free market Thai GDP per capita outpaces SOE Vietnamese GDP per capita by 4:1. It's not even close.

[Soulflytribe]

Well, Vietnam made some economic reforms, opened its market to the outside world, to foreign investors and multinationals.
Unfortunately, they didn't reform to the same extent as Malaysia or Thailand did. And this is sad because they could easily have applied hardcore liberalization reforms since its a dictatorship and no one would be able to complain: the good old chinese way. But still if they keep growing 8% every year like they are doing they will become just like... Bolivia within a decade. And I am talking about the poorest country in South America.

But lets focus on the bright side: at least Vietnam made something to change its status quo, this is far better than to stay stagnated inside some kind of perpetual existential limbo like Cuba and so many other undeveloped countries have been doing for ever.
Malaysia and Thailand know that the benchmark to pursue must be Singapore. They are fated to succeed soon. Just like my beloved Chile.

And I won't be surprised at all if a vietnamese spring suddenly erupts and destroys all the tiny economy they are so hardly trying to build...

In resume: just another case of communism efficiency. But we can always just "blame the americans", it is so much easier.

[Rei Murasame]

Them being a Socialist Republic wasn't really the central issue I wanted to highlight, but more their way of dealing with the problems that they encountered. Simply saying that "Thailand is better" doesn't tell us anything.

This was what I was going to put into the thread.

ASEAN Economic Bulletin Volume 26, Number 1, April 2009:

• Vietnam: Further Challenges in 2009
  

  Abstract
  This special issue of ASEAN Economic Bulletin zeroes in on the challenges faced by one of the emerging ASEAN economies, Vietnam. Vietnam, which was hailed as a miracle economy in the recent years, came under severe pressure in 2008. Inflation rose, real estate market crashed, and stock market burst. It was in the second half of 2008, as the central bank's policy measures came into play and global economies slowed, Vietnam could rein in its macroeconomic meltdown. Going into 2009, with external demand still showing no signs of recovery, Vietnam will face a slower growth. The paper further gives some policy options for Vietnam to restructure its economy and deliver good quality growth. Finally, the paper previews the articles contained in this special issue on Vietnam.
  
  Keywords
  Vietnam, inflation, exports, investments

  
  
  
• Vietnam: Sustaining Growth in Difficult Times
  

  Abstract
  Vietnam has achieved high rates of economic growth for a period of two decades. Growth slowed in 2008 as the government was forced to tighten credit in order to slow down price inflation. With the advent of the global recession, the government must now reverse course and find ways to support demand in the face of declining exports and foreign investment. However, as a small, open economy with a fixed exchange rate and large fiscal and trade deficits, Vietnam's options are limited. The most effective response would be to gradually depreciate the Vietnamese dong to slow the flood of imports and boost export prospects, while redirecting the public investment towards labour rather than import-intensive projects. The government must also find ways to impose discipline on the large state-owned enterprises and control their diversification into financial sector activities.
  
  Keywords
  Vietnam, macroeconomic policy, economic growth, state-owned enterprises

  
  
  
• Avoiding the Middle-Income Trap: Renovating Industrial Policy Formulation in Vietnam
  

  Abstract
  Vietnam's growth in the last one-and-half decades has been driven by the liberalization effect and large inflows of external purchasing power. Now that the processes of systemic transition and global integration have deepened, Vietnam needs to create internal value to continue to grow and avoid the "middle-income trap". The country has reached the point where growth towards higher income cannot be secured unless policy making is renovated significantly to activate the country's full potential. The vision of Industrialization and Modernization to be achieved by 2020 must be backed by realistic industrial strategies and concrete action plans, which are currently lacking. Stakeholder involvement in policy design, inter-ministerial coordination, clear directives from the top, and incentive structure for government officials must be improved. This in turn calls for radical changes in policy administration. A new style of leadership, a technocrat team directly serving the top leader, and strategic alliance with international partners are proposed as key entry points for the renovation of Vietnam's industrial policy formulation.
  
  Keywords
  Vietnam, industrialization, industrial policy, economic growth

  
  
  
• Banking and Financial Sector Reforms in Vietnam
  

  Abstract
  This paper summarizes Vietnam's developments in the banking and financial sector to date. It assesses the system's weaknesses that played an important role during the macroeconomic turbulence of 2008. It then discusses the need for deeper reforms of the country's key macroeconomic institutions. In general, for Vietnam to achieve its goal of becoming a modern industrialized economy by 2020, it needs to have world-class public institutions to complement a flexible and entrepreneurial private sector. Nowhere is this more true than in the banking and financial markets where effective policy-making and skilful regulation have to be balanced against profitable risk-taking —all set against a background of commitment to a one-party state where social and political stability still reigns supreme.
  
  Keywords
  Finance, banking, institutional reforms, macroeconomic turbulence, prudential supervision

  
  
  
• Sudden Surge in FDI and Infrastructure Bottlenecks: The Case in Vietnam
  

  Abstract
  Through examining trends and patterns of foreign direct investment (FDI) in Vietnam over the twenty years of reform (1986–2008), this paper found a big increase in registered FDI recently. This is not in accordance with the increase in actual capital disbursement because of low absorptive capacity of the economy in terms of poor infrastructure, restricted and unstable policy, and weak competitive capacity of domestic firms. Moreover, newly massive flows of FDI brought an explosion to infrastructure development in the form of office buildings, hotels, industrial zones, resident parks and ports. This could help to improve the situation of infrastructure because it has not kept pace with the rapid economic growth over the past decade and are considered as major constraints in attracting more FDI.
  
  Keywords
  Vietnam, foreign direct investment (FDI), mergers and acquisitions (M&A), entry mode, infrastructure

  
  
  
• Managing Success in Vietnam: Macroeconomic Consequences of Large Capital Inflows with Limited Instruments
  

  Abstract
  Vietnam has experienced spectacular economic growth over the past decade, and a lot of this has been a result of massive inflows of FDI. Although much has been written on the impact of FDI in developing countries, previous studies have generally ignored macroeconomic consequences in cost-benefit assessments. These macroeconomic aspects can be particularly important in transitional economies like Vietnam, where some of the instruments of macroeconomic stabilization may be blunt or unavailable. First, growth in capital inflow needs to be accommodated by real exchange rate appreciations. In dollarized economies like Vietnam, the nominal exchange rate cannot be relied upon to deliver it, so inflation is usually the result. In dollarized economies, it is also difficult for the central bank to conduct open market operations, in order to sterilize large capital inflows, or mop up excess liquidity. Again, this could add to inflation. The combination of a young and inexperienced banking system and a investment-hungry SOE sector only exacerbates the situation, and increases the risk of imbalances that can result in a crisis.
  
  Keywords
  Capital inflow, Macroeconomic adjustment, dollarization, real exchange rates, transitional economies, Vietnam

  
  
  
• Economic Transition and Export Performance in Vietnam
  

  Abstract
  This paper examines Vietnam's export performance in the process of economic transition. The key theme of analysis is the complementary role of domestic policy shifts and the ongoing changes in world trade patterns in determining trends and patterns of exports. The analysis yields clear evidence that when market forces are unleashed, albeit in a constrained fashion, specialization patterns assert themselves as predicted by the received trade theory. On the contrary, there is no evidence to suggest that the state-mediated attempts in the early stage of reforms to mould the emerging patterns of manufacturing exports had any tangible effect. Vietnam's export performance looks impressive, particularly when we take into account the nature of the reform process, and the constraining effects of the U.S. trade embargo during the first decade of reforms and the historic overwhelming reliance on the Soviet bloc markets.
  
  Keywords
  Vietnam, exports, FDI, global production sharing, processed food

  
  
  
• Vietnam after Two Years of WTO Accession: What Lessons Can Be Learnt?
  

  Abstract
  This paper provides an overview of the socio-economic changes in Vietnam since its WTO accession in early 2007. This is critical since ex ante studies have all seemed to significantly underestimate the impacts of WTO accession and integration on Vietnam's economy, whilst failing to rigorously analyse foreign capital inflows and related macroeconomic issues. The years 2007–2008 witnessed remarkable improvements in Vietnam's economic performance, from real aspects to social issues and economic institutions. However, quality of growth remained modest, trade deficit widened, inflation surged, while Vietnam's vulnerability to negative external shocks gets increasingly apparent. The paper then draws out several major lessons for Vietnam from its first two years of WTO membership. Areas for further improvements, such as resolutions of bottlenecks to strengthening competitiveness, sustaining development, and building managerial capacity to mitigate macroeconomic and social risks, are also identified.
  
  Keywords
  Economic growth, macroeconomic stability, post-WTO accession, economic recession

[Daktoria]

I'll read some of those studies tomorrow since I'm tired and have to go to bed.

However, you might want to consider something else about Thailand:



Even you have to admit they're doing it right.

Don't waste your time with Vietnam. It's like learning how to drive a horse and buggy when everyone's driving cars.

[Rei Murasame]

Don't waste your time with Vietnam. It's like learning how to drive a horse and buggy when everyone's driving cars.

That's easy to say when you are a liberal-capitalist in a developed country.

Part of the reason we have opposed views on history, which is to say, opposed views on the role of bio-physical effects and social institutions, is because I "waste time" a lot on developing countries. If I only looked at people who (purportedly) are coasting along quite well, then my outlook would be pretty shallow, wouldn't it?

It's also because I don't imagine that slapping the United States constitution on top of a country (which I know you are thinking of, even if you don't say it) will magically improve a nation's vital life signs. It's also a tautology where you all are saying that 'free market liberalism is good governance' and that 'good governance is good'. It completely overlooks the fact that political experience is accumulated - it does not just appear - and that people have to make policy decisions within environments and circumstances that were not of their choosing.

That's why saying "Vietnam should be Thailand", is actually just a way to sidestep actually describing how to get what could be described as prosperity while maintaining stability.

[Daktoria]

That's easy to say when you are a liberal-capitalist in a developed country.

Thailand isn't developed.

Part of the reason we have opposed views on history, which is to say, opposed views on the role of bio-physical effects and social institutions, is because I "waste time" a lot on developing countries. If I only looked at people who (purportedly) are coasting along quite well, then my outlook would be pretty shallow, wouldn't it?

Thailand isn't "coasting". Did you look at the graph? Even accounting for the Asian financial crisis, it's still performing extremely well.

It's also because I don't imagine that slapping the United States constitution on top of a country (which I know you are thinking of, even if you don't say it) will magically improve a nation's vital life signs. It's also a tautology where you all are saying that 'free market liberalism is good governance' and that 'good governance is good'.

Well it has worked for Thailand. In fact, the surge of Thai prosperity is closely linked to anti-communist wariness during and following the Vietnam War. Democracy thrived with a middle class aligning with the King against the military junta, and a Constitutional Monarchy was established (rather similarly to post-Cromwell Britain).

If you want a summary of Thai economic history and policy recommendations, you can find it here:

http://www.scribd.com/doc/36172312/Econ ... f-Thailand

In short, the key is judicial reform where you have reliable private property and rights to privacy. That way, people are willing to invest since they know the government can't and won't sweep in and expropriate their assets whenever it feels like it.

It completely overlooks the fact that political experience is accumulated - it does not just appear - and that people have to make policy decisions within environments and circumstances that were not of their choosing.

Well I agree, but people can think before we act. History has a time zero. It has to get off the ground.

That's why saying "Vietnam should be Thailand", is actually just a way to sidestep actually describing how to get what could be described as prosperity while maintaining stability.

I'm sorry but this is really ironic.

Before, you called me the most risk averse person on the forum. There's nothing more risk averse than trying to hide behind the government instead of investing for yourself.

On top of that, is there a reason you believe Vietnam is more prosperous or less stable than Thailand?

[Rei Murasame]

Thailand isn't developed.

Occam's Razor, I'm taking about you.

Well it has worked for Thailand. In fact, the surge of Thai prosperity is closely linked to anti-communist wariness during and following the Vietnam War. Democracy thrived with a middle class aligning with the King against the military junta, and a Constitutional Monarchy was established (rather similarly to post-Cromwell Britain).

I'm completely aware of this. Note that Thailand also wasn't coloni----... why I am having to again point out that Vietnam has a completely different history from Thailand?

Before, you called me the most risk averse person on the forum. There's nothing more risk averse than trying to hide behind the government instead of investing for yourself.

We can dance around that phrase in a myriad of different ways, but I just can't summon the energy to bother.

On top of that, is there a reason you believe Vietnam is more prosperous or less stable than Thailand?

I never said it was or wasn't, you were the one who brought Thailand into the topic, for some reason.

[Ombrageux]

Why the focus on Vietnam on this rather than any other country? I'm sure it is an interesting example of a postwar developing country under a communist dictatorship, among many others.

[Daktoria]

I'm completely aware of this. Note that Thailand also wasn't coloni----... why I am having to again point out that Vietnam has a completely different history from Thailand?

The comparative politics between Vietnam and Thailand are the answer to Vietnamese internal development. Thailand's prosperous and stable. Vietnam is not. Therefore, if Vietnam wants to become prosperous and stable, it should make up ground.

Simple enough. Especially as a historicist, you should know that the key to bureaucratic reform is pointing out Vietnamese History. That way, you can orchestrate Vietnamese traditions and community towards a more constructive schematic.

Even your own (Middle-Income Trap) study admits this:

Within this dynamic East Asian context, Vietnam must successfully conduct three crucial policies to sustain growth, namely: (i) generation of internal value; (ii) coping with new social problems caused by rapid growth; and (iii) effective macroeconomic management under financial integration. The first promotes drivers of growth while the second and the third prepare political stability and social support without which industrialization and modernization cannot be sustained. By 2008, the risks of social problems such as traffic congestion and environmental destruction as well as macroeconomic imbalance such as asset bubbles and price instability had become evident in Vietnam. Management of industrialization in this broad sense must be installed to face new challenges, or the entire process of industrialization may stall (Murakami 1992, 1994). While all three tasks are important, the present analysis focuses on the first issue of internal value creation while leaving the discussion of the remaining two to other occasions...

...Third, the Japanese concept of monozukuri, which literally means "making things", may give some hints on the direction to go. Monozukuri is manufacturing for the primary purpose of achieving customer satisfaction through high quality in the spirit of a proud and dedicated artisan, rather than just making profits. To achieve this, long-term relationship and internal accumulation of skill and knowledge are institutionalized within each company as well as among partner companies (between assemblers and suppliers, for example). Practical means of productivity improvement such as 5S, QCD,5kaizen, just-in-time method, and quality control circles have been established and available to companies in the developing world through experienced instructors and manuals. In the policy realm, the concept of monozukuri is often [End Page 30] highlighted by the Japanese government for the purpose of upgrading domestic manufacturing capability and spreading the Japanese business model abroad (Tsai 2006).

In fact, Thailand has directly embraced the value of creative economy:

http://thailand.prd.go.th/view_inside.php?id=5867

Because of its cultural heritage, including local wisdom, art, and craftsmanship, Thailand has great potential for increasing its proportion of creative economy value.

The Director of the Intellectual Property Promotion Office, Department of Intellectual Property, Ministry of Commerce, Mrs. Auramon Supthaweethum, said that Thailand is ready to serve as the creative economy network center for various countries in the ASEAN region.

Mrs. Auramon spoke about the creative economy at a forum organized by the Foreign Office of the Government Public Relations Department (PRD) on 15 September 2011 at the PRD Auditorium in Bangkok. Joining the forum were about 50 PRD officials from the central administration and public relations offices in all parts of the country.

Mrs. Auramon quoted a report from the United Nations Conference on Trade and Development that Thailand ranked 19th among various countries in the world and the first in the ASEAN region, with the highest creative industrial value. The Thai government in 2009 set a policy to increase the country’s proportion of creative economy value from 12 percent to 20 percent of GDP by the year 2012.

In response to this policy, a total of 10 provinces have been selected as “creative city prototypes” from 73 provinces and 109 cities nationwide. The 10 provinces include Chai Nat, Chiang Rai, Chiang Mai, Nan, Phetchaburi, Maha Sarakham, Yala, Lop Buri, Lampang, and Ang Thong. The Department of Intellectual Property will push for further development of these provinces in terms of the creative economy.

Mrs. Auramon said that although Thailand is rich in cultural and geographical diversity, which offers great opportunities for promoting the creative economy, the country still needs more infrastructural facilities to help develop creative industries.

In the policy statement of the Yingluck Shinawatra administration delivered to the National Assembly on 23 August 2011, the Government will enhance competitiveness and broaden market access for industries, domestic services, and small and micro community enterprises by integrating them into the creative economy. The objective is to produce goods and services with high value and quality while promoting a knowledge-based, skill-based, and creative society. The Government will also support innovation from research and development and traditional knowledge-based product branding, especially for arts and crafts, community products, and jewelry.

In terms of marketing, trade, and investment, the Government will develop goods and services that create new income-generating opportunities and meet the demands and preferences of global consumers, taking into account the concepts of innovation-driven creative economy, utilization of local wisdom, and environmental considerations.

[Rei Murasame]

My, my. That reads like an awful lot of government action, Daktoria. Have I managed to save myself some argument-effort here?

[Daktoria]

Of course. There's plenty of action (and a lot less arguing) when government decides to change.

The key here is Thailand's government is dedicated towards culture, not economics. It's letting economics emerge on its own.

Vietnam, in contrast, still operates according to top-down central planning.

[Rei Murasame]

Now that's a cute trick. Do show me how one goes about splitting cultural legislation from economic legislation?

[Daktoria]

http://en.wikipedia.org/wiki/Procedural_justice

It's the buildup, not the climax, that's important.

[Rei Murasame]

Well sorry, I am not a liberal, therefore I do not recognise the difference. It's all state action to me, do what works with the least effort. But seeing as I borrow so much thought from Guild Socialism, you should've expected I'd say that. If we alter the system so that initial distribution (not redistribution) in some cases is changed in a way that is desirable to us, all that means is that we got what we wanted in those cases, with less continuous effort and with more foreplanning.

Nice to see you joining me in support of state actions.

[Soulflytribe]

Well sorry, I am not a liberal, therefore I do not recognise the difference. It's all state action to me, do what works with the least effort.

It must be extremely hard for Rei to see countries doing everything she opposes and prospering, she must think to herself: "This country can only be growing this way because of massive Government intervention, I can't be wrong! My models always work! They never fail!" And then she inverts terms to make her point valid: "Of course Vietnam is doing worse than Thailand because Vietnam lacks Government intervention in the economy!"

[Rei Murasame]

No, it's simply that life is not that simple. From the very start of this topic my intent was never to say "intervention vs non-intervention" or whatever, but only to talk about the type of actions that are required. Concerning Thailand, they have had a different history and so their path makes sense in that context. I never denied that.

It was you guys who entered and tried to turn it into something about 'free markets', and then failed magnificently at that since Thailand is obviously not a 'free market' economy either.

Vietnam is doing 'worse' than Thailand because of a whole host of factors, and it cannot be reduced to merely "Vietnam just has a bigger state" (whatever that means), because that's overly simplistic and ridiculous.

I wish that it were possible to actually talk about the whopping deficiencies in Vietnam's form of government without it becoming some attempt by libertarians to reduce every problem to the existence of the state while attempting to make implausible cases for how other counties are 'doing better' because they are supposedly libertarian states even though they are not libertarian states at all.

[Daktoria]

Well sorry, I am not a liberal,

You must have the most boring sex ever.

therefore I do not recognise the difference.

Then you need to get lost in the moment.

It's all state action to me, do what works with the least effort.

SO LAZY! (Whatever happened to earning more than you spend instead of spending less than you earn?)

But seeing as I borrow so much thought from Guild Socialism, you should've expected I'd say that.

Yes, you're spoiled from too much attention.

If we alter the system so that initial distribution (not redistribution) in some cases is changed in a way that is desirable to us,

Vary the position. BE CREATIVE.

all that means is that we got what we wanted in those cases, with less continuous effort and with more foreplanning.

YES, THAT'S THE POINT.

Nice to see you joining me in support of state actions.

Oh God no. What have I gotten into?