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Colonization by France
France took control of Vietnam in 1887 and held some control until the Vietnam War in 1954. France introduced Western ideology and Christianity into the Vietnamese culture. In 1945, Vietnamese nationalists overthrew the foreign government and established the Democratic Republic of Vietnam in the Northern part of the country, while France maintained control of the southern part. France attempted to regain control, starting an eight year war that resulted in France being forced out in 1954. -
Independence and the Start of the Vietnam War
Northern Vietnam gained independence in 1954, but France maintained influence over the Southern Vietnamese government. In 1959, Norther Vietnam introduced a policy that aimed to reunite the communist north and the capitalist-influenced south regions. This began the Vietnam War. The US and many democratic allies became involved over fear of the spread of communist in the region. -
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Vietnam War's Social Impact
The war had an immense impact on the Vietnamese people during and after the war. Bombing caused widespread destruction on farm land and forests, destroying half of the domestic agricultural production. A large number of people fled to cities as refugees from the fighting, causing resources and services to the increased urban population to be scarce and overused. Unemployment rose and the lack of resources created a large black market for food, drugs, and illegal services such as prostitution. -
Political Structure and Lack of Democracy
Vietnam is a socialist republic with a President, who serves as the head of state. The president must be part of the single party- the communist party- and is elected by the National Assembly of 500 people, who are elected by popular vote. According to their Constitution, "The people make use of state power through the agency of the National Assembly and the People's Councils". In reality, all those that serve on the Assembly must hold communist ideals in line with the rest of the government. -
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Centrally Planned Government
The period began with a poor economy, impoverished population, and intense damage from the war. The country was in need of significant infrastructure and economic reform. This period of centrally planned governmental policies and mechanisms is characterized by a stagnant economy and low levels of growth. -
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US Trade Embargo
The US imposed a trade embargo on Vietnam at the conclusion of the Vietnam war, which was not lifted until nearly two decaded later. The embargo made it extremely difficult for Vietnam to trade with western countries and recieve adequate aid in times of economic crisis, namely the hyperinflation of 1986. -
End of the Vietnam War
The end of the Vietnam War unified the Northern and Southern regions of Vietnam under one communist government. -
Failure to Stabilize the Currency
The price/wage/currency adjustment scheme introduced in 1985 failed, resulting in a widespread economic crisis. Hyperinflation reached 775% in 1986. There was a huge increase in foreign debt and national scarcity of food and other essential goods. -
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Doi Moi: Reform of the Economy
Vietnman became an open-market economy with a strong focus on global integration in an attempt to save its struggling economy. The period is characterized by very strong GDP and economic growth, economic reform in finance, infrastructure, public policy, and foreign relations. -
Vietnam Opens Up to Foreign Investment
With the initiation of the Law of Foreign Investment in 1987, Vietnam experience an influx in foreign direct investment (FDI), making it the largest recipient of FDI among developing countries. In 1994, FDI was 10% of the country's GDP. -
Land Reform
Vietnam introduced property rights in 1987 with the introduction of Land LAw, which was later revised in 1993. Farms are granted use rights to farmland. -
Economy Begins to Grow
Vietnam starts to see the effects of their polivies of eocnomic openness. Over 17,400 entrepeneurial firms were housed in Vietnam by 1994, FDI reached 10 Billion USD in 1996, and the GDP growth rate was 9.5% and 9.3% in 1995 and 1996 respectively. -
Diplomatic and Trade Expansion
Vietnam became a member of the Association of Southeast Asian Nations (ASEAN) in 1995 and a member of Asia-Pacific Economic Cooperation (APEC) in 1998. Vietnam signed a bilateral trade agreement (BTA) in 2001 and officially became a member of the World Trade Organization (WTO) in 2007. All these measures aimed to further diplomatic ties in the region and expanding trade around the world as a means of integrating the country into the global economy. -
Thriving and Stable Economy
The stock market index (VN-Index) peaked at 1,170 in March of 2007, shortly after Vietnam joined the WTO and registered a GDP growth rate of 6.98% in 2006. The Vietnamese open-market economy had reached a place of stability and was experiencing sustained high levels of growth -
Rural Population's Contribution to the Economy
The population of Vietnamese people is largely made up on indigenous people, with a handful of groups of immigrants that are primarily located in the two largest cities, Ho Chi Mihn and Hanoi. Nearby 75% of the population is located in rural areas, which contributed to the large employment of people for industrial and agricultural production. However, the agricultural production share of GDP is down significantly in the past three decades, at 15% in 2017 vs. 41% in 1987. -
Gender and the Work Force
After the war, the share of men relative to women declined due to death loss, which provided women greater employment opportunities as the economy began to grow and a large labor force was needed. Vietnam has one of the largest female labor force participation rates in all of Asia, around 71% vs. 53%. Greater participation of women in the LF helps spur economic growth as greater involvement of the working age population creates greater production, raising the potential GDP growth rate. -
Poor Institutional Quality and Lack of Foreign Business
Vietnam has struggled to attract foreign business since the financial crisis in 1997. The political environment is riddled with corruption and has a poorly structured and vague legal system compared to most developed countries, making it unattractive for business operations. Though their economy has grown and become stable, the poor institutional quality has played a central role in inhibiting Vietnam's ability to attract business and, thus, further integrate into the global economy.
