darock0116
05-23-2007, 12:55 PM
DOI MOI
Doi Moi, which literally means change and newness, is the Vietnamese Communist Party's term for reform and renovation in the economy. This term was coined in 1986 for a transition from the centrally planned Stalinist command economy to a "market economy with socialist direction," what is often referred to as market socialism. In contrast to Eastern European reforms Doi Moi favors gradualism and political stability over radical change, with economic restructuring to come before privatization. Vietnam was more like China in its economic structure than the Soviet Union or Eastern Europe. Furthermore, the role models for successful economic development in East Asia have not promoted political liberalization.
The idea of Doi Moi originated from seeing the negative results of suppressing some spontaneous war-time experiments. Thus it was that the VCP's Sixth National Congress in December of 1986 acknowledged that the economic model followed since 1954 had failed. In 1988 there were major policies initiated which moved the system toward a market economy. Some of these were:
1. Payment of wage and salaries on a straight cash basis
2. Pricing of inputs to state enterprises on the basis of costs
3. Permission for private employers to employ up to ten workers
4. Abolition of internal customs check points
5. A revised Foreign Investment Law
6. Virtual decollectivization of agriculture
7. Elimination of virtually all direct subsidies and price controls
8. Increased autonomy for enterprise managers
9. Devaluation of the currency (dong) to market rates
10. Elimination of the State's monopoly in foreign trade
11. Provision for foreign participation in banking
12. Reduced restrictions on private enterprise
13. Creation of export processing zones for 100% foreign-owned enterprises
14. Legislation on shareholding corporations
15. Dismantling of major elements of central planning and bureaucracy
16. A 15% reduction in the government workforce
17. A return to former owners or their heirs of businesses in the South that were nationalized in 1975.
These measures were not necessarily implemented but they were stated policy of the VCP. For example, a random sample of 32 state enterprises in 1990 found only five were operating in accordance with these policies. However, the cooperative and private sectors account for two thirds of the gross national income. Some of the reforms were necessitated by the changes in the Soviet Union. After years of covering 25 to 30 percent of its state budget with foreign aid, Vietnam, in 1991, had to make do with only five percent from this source.
Ongoing Problems of the 1990's
The Vietnamese Government has sought foreign investment and many foreign businesses are interested but the amount of actual investment has fallen short of the potential because of severe problems in Vietnam. These problems consist of an unwillingness of the Communist government to relinquish absolute political control. This means that there is an absence of the rule of law and foreign investors are at the mercy of party officials. This encourages corruption. Domestic small businesses are also at the mercy of party officials. By 2002 there were about fifty thousand of these but they are subject to as many as fifteen bureaucratic inspections each year.
There is also a generally low level of infrastructure. In principle all land was owned by the government and this made the acquisition of business sites difficult and uncertain. There are banks but about of their lending goes to state enterprises. However all is not lost; some of the recipients of these state-sanctioned loans channel the funds into a black market in capital.
The Current Economy
In the twentyfirst century some of Vietnam's problems are being solved. Between 1995 and 2004 Vietnam grew at a rate of about 7.5 percent per year and this rate is second only to that of China. This period included the years of the Asian financial crisis. It also included the period of the collapse of the Soviet Union and the decline in foreign from that source. The recent years look even better. Vietnam's foreign trade is on the order of $20 billion per year whereas its total foreign aid is only about $2 billion per year. In 2003 Vietnam took in foreign investment equal to 8 percent of its GDP. This is a higher proportion of foreign investment than China got.
Vietnam's trade with the U.S. is growing after a trade pact was agreed upon in 2002. However some elements of the trade is running into protectionist legislation in the U.S. The export of catfish to the U.S. from Vietnam was restricted by a high tariff invoked by U.S. catfish farmers. The textile industry in Vietnam received a quota for exports to the U.S. and the textile trade grew from $47 million in 2001 to $2.4 billion in 2003. However once the quota is filled the growth will thereafter be limited to a few percent per year.
http://www.sjsu.edu/faculty/watkins/vietnam.htm#DOIMOI
Doi Moi, which literally means change and newness, is the Vietnamese Communist Party's term for reform and renovation in the economy. This term was coined in 1986 for a transition from the centrally planned Stalinist command economy to a "market economy with socialist direction," what is often referred to as market socialism. In contrast to Eastern European reforms Doi Moi favors gradualism and political stability over radical change, with economic restructuring to come before privatization. Vietnam was more like China in its economic structure than the Soviet Union or Eastern Europe. Furthermore, the role models for successful economic development in East Asia have not promoted political liberalization.
The idea of Doi Moi originated from seeing the negative results of suppressing some spontaneous war-time experiments. Thus it was that the VCP's Sixth National Congress in December of 1986 acknowledged that the economic model followed since 1954 had failed. In 1988 there were major policies initiated which moved the system toward a market economy. Some of these were:
1. Payment of wage and salaries on a straight cash basis
2. Pricing of inputs to state enterprises on the basis of costs
3. Permission for private employers to employ up to ten workers
4. Abolition of internal customs check points
5. A revised Foreign Investment Law
6. Virtual decollectivization of agriculture
7. Elimination of virtually all direct subsidies and price controls
8. Increased autonomy for enterprise managers
9. Devaluation of the currency (dong) to market rates
10. Elimination of the State's monopoly in foreign trade
11. Provision for foreign participation in banking
12. Reduced restrictions on private enterprise
13. Creation of export processing zones for 100% foreign-owned enterprises
14. Legislation on shareholding corporations
15. Dismantling of major elements of central planning and bureaucracy
16. A 15% reduction in the government workforce
17. A return to former owners or their heirs of businesses in the South that were nationalized in 1975.
These measures were not necessarily implemented but they were stated policy of the VCP. For example, a random sample of 32 state enterprises in 1990 found only five were operating in accordance with these policies. However, the cooperative and private sectors account for two thirds of the gross national income. Some of the reforms were necessitated by the changes in the Soviet Union. After years of covering 25 to 30 percent of its state budget with foreign aid, Vietnam, in 1991, had to make do with only five percent from this source.
Ongoing Problems of the 1990's
The Vietnamese Government has sought foreign investment and many foreign businesses are interested but the amount of actual investment has fallen short of the potential because of severe problems in Vietnam. These problems consist of an unwillingness of the Communist government to relinquish absolute political control. This means that there is an absence of the rule of law and foreign investors are at the mercy of party officials. This encourages corruption. Domestic small businesses are also at the mercy of party officials. By 2002 there were about fifty thousand of these but they are subject to as many as fifteen bureaucratic inspections each year.
There is also a generally low level of infrastructure. In principle all land was owned by the government and this made the acquisition of business sites difficult and uncertain. There are banks but about of their lending goes to state enterprises. However all is not lost; some of the recipients of these state-sanctioned loans channel the funds into a black market in capital.
The Current Economy
In the twentyfirst century some of Vietnam's problems are being solved. Between 1995 and 2004 Vietnam grew at a rate of about 7.5 percent per year and this rate is second only to that of China. This period included the years of the Asian financial crisis. It also included the period of the collapse of the Soviet Union and the decline in foreign from that source. The recent years look even better. Vietnam's foreign trade is on the order of $20 billion per year whereas its total foreign aid is only about $2 billion per year. In 2003 Vietnam took in foreign investment equal to 8 percent of its GDP. This is a higher proportion of foreign investment than China got.
Vietnam's trade with the U.S. is growing after a trade pact was agreed upon in 2002. However some elements of the trade is running into protectionist legislation in the U.S. The export of catfish to the U.S. from Vietnam was restricted by a high tariff invoked by U.S. catfish farmers. The textile industry in Vietnam received a quota for exports to the U.S. and the textile trade grew from $47 million in 2001 to $2.4 billion in 2003. However once the quota is filled the growth will thereafter be limited to a few percent per year.
http://www.sjsu.edu/faculty/watkins/vietnam.htm#DOIMOI