Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Monday, November 13, 2006

Vietnam Today: America's Grand Strategy at Work

Our "soft power" at work:

Vietnam: The South Has Finally Won - Newsweek: International Editions - MSNBC.com: Hanoi's communists won the Vietnam War, but southern-born reformers are leading an economic boom as the country opens up to the world: By Michael Hastings and George Wehrfritz: Grainy black-and-white photos show thin men riding bicycles along streets devoid of cars. A prominent chart tracks paltry monthly rice allotments to every category of Vietnamese, even communist cadres. Assorted ration cards and food stamps fill a display case... the painful decade after North Vietnam's communist armies toppled the U.S.-backed government in Saigon in 1975. An introductory message describes the period as one of "inappropriate socioeconomic management." That's an understatement: from 1975 to 1986, Vietnam's rulers oversaw a disastrous experiment in Stalinist collectivization, herded thousands of Southern capitalists into labor camps and unleashed an exodus of boat people across the region. The human suffering was immense.

The government calls the show "Hanoi Life Under the Subsidy Economy, 1975-1986." But a sexier title would be "How the South Won the War." The Vietnamese capital portrayed in the exhibit bears scant resemblance to the bustling present for one simple reason: Hanoi is now playing by Saigon's rules. Economic reforms pushed by Southern entrepreneurs have fueled an economy that's grown nearly as fast as China's over the last decade. Manufacturing jobs are plentiful, and the national poverty rate has plummeted from 57 percent in 1993 to about 18 percent today....

Hanoi credits the turnaround to policies known simply as doi moi, or "renovations," launched with great fanfare in 1986. In fact, local leaders in Saigon, now known as Ho Chi Minh City, began testing the new approach years earlier by tapping an ethnic-Chinese business class that Hanoi viewed as ideologically suspect. Those officials later rose to national prominence, even as local entrepreneurs helped build a globally competitive, export-led economy funded mainly by foreign investment. Foremost among the forward-thinking southern leaders was Vo Van Kiet, who became deputy premier in 1986 and helped launch doi moi. He served as prime minister in the 1990s. "The official history of Vietnam's reforms doesn't include this first chapter," says Pham Chanh Duong, a key businessman from that era. "We gave [Hanoi] a practical example for the reforms they enacted in 1986, but nobody dares talk about that."

The conquered South led the economic charge in part because it had experience with colonial markets and benefited from America's wartime infrastructure of roads, highways, airbases and ports. Over the past decade, though, the North-South divide has narrowed. Hanoi has improved its own roads, rails and ports to such an extent that light manufacturing now flourishes there and in nearby Haiphong. And the importance of opening the economy, once pushed by southerners, has become accepted wisdom in the capital. "There are a lot of stereotypes about the North and South having different points of views," says Minh Vu, a senior economic adviser to Prime Minister Dung, noting that the regional divide no longer plays a great role in shaping policy.

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