1. Vietnam and the experience of the Asian crisis
Pietro Masina
University of Naples “L’Orientale” (Italy)
A decade after:
recovery and adjustment since the East Asian crisis
Bangkok , July 2007

2. The Vietnamese transition
Reforms started already in the late 1970s, through ‘fence breaking’ and experiments in agriculture and industry
In the CPV launched the doi moi: from central planning to market economy
The reform process was accelerated in the late 1980s by the collapse of Soviet Union
By the early 1990s ‘price mattered’ but the government maintained a prudent step-by-step attitude

3. A new fifth dragon? Lights and shadows
Growth is sustained and less unbalanced than in China
Poverty reduction has been outstanding
Inequality has increased - so far not dramatically, but risks are high
The WTO accession presents many opportunities and many challenges
But the government is still in command of many economic leverages
Financial liberalization has been resisted – the booming stock market may become a vehicle of destabilization

4. GDP growth rates, trendline

5. Households living below the government poverty line, percentage

6. From hero to villain, to hero again, to undisciplined pupil
Hero: in the early 1990s Vietnam was supported by the IFIs - it was moving towards the market (and they hoped towards the US)
Villain: by 1996 it had become a poor performer, too slow in implementing reforms
In 1997/98, it was told that its problems were locally rooted – without bold reforms, it would miss recovery
Hero again: in the early 2000s growth and poverty reduction made Vietnam popular
Undisciplined pupil - it should do better/faster

7. Resilience during the Asian crisis
Vietnam was hit already before the crisis by a contraction of Asian FDI
Its currency remained stable, i.e., appreciated in relation to Asian currencies
Economic growth slowed down, but the country was insulated by the financial storm (the dong was not convertible)
Growth of the agricultural sector played a counter-cyclical role

8. GDP growth by sector, 1996–2005

9. GDP, annual growth rate (ASEAN 6)

10. Saving and investment (in percent of GDP)

11. FDI inflows, 1986–2005

12. Net FDI inflows 2004 (% of GDP)

13. GDP by ownership

14. GDP per capita as % of GDP per capita in Asian countries, PPP

15. GINI Index, Asian countries

16. Income ratio of richest 10% to poorest 10%

17. Privatization of SOEs
Privatization of SOEs regarded so far small and not strategic companies
The ‘equitization’ process is due to accelerate and to touch large SOEs
Risk of loss of sovereignty and creation of foreign monopolists
Risk of higher inequality through appropriation and sale of SOEs shares

18. Current challenges
Agricultural diversification played a major role in poverty reduction - there is little scope to move further in this direction
Employment generation in the formal industrial sector is insufficient
Inequality may play a destabilizing role
The alliance between SOEs and FDI may alter the political nature of the leadership