Having attained middle-income status, Vietnam aims higher
economist.com
economist.com
In my limited, sub-30-years lifetime, every single time I have visited Vietnam it seemed like visiting a different country.
The first time, there were barely any cars in an ocean of scooters and bikes. Hanoi still looked very much Parisian, with its allées and surface canalisation. I also dimly remember, there was a kind of fascination with all things Western.
The second time, construction sites were everywhere. Also, what somehow stuck out to my teenage brain was the entrance of something. Its earlier absence only became noticeable when it now appeared: Brands. Franchises. Be it milk or Vespa, or Haprosimex, they arrived. Also, entry of the heavenly air conditioners!
The third time, the streets were more congested than ever before. The middle class went to their new middle class supermarkets and demand fueled the availability of foreign goods like sausages and toast. Sill tasted like crap. Mainly because they were the American variety. Local fresh markets were seen by many Vietnamese now as 'poor people's markets' and lacking food safety.
To buy any movie or PC game, you just had to walk into one of the myriads of shops and ask for the CDs or DVD(s). if you knew the Vietnamese name, that is. Which 98% of the time, has nothing, absolutely nothing to do with its original name. With the help of my cousin, I managed to buy 'Mighty Defence of Medieval Fortresses' (Stronghold) and 'Battle of the Three Gods' (Age of Mythology) for about 3 fiddy dollars. Then we proceeded to play the shit out of them the whole summer.
This time, tourists are now relatively common. Vietnamese children (at least in HCMC and Hanoi) have gotten used to them, meaning they won't look at you like you are an Alien if you are non-Asian looking. But they'll still look at you and be very friendly.
KFC, Burger King and Popeyes have arrived.
The biggest change however is: EVERY SINGLE PERSON SEEMS TO HAVE A SMARTPHONE. And they do stuff with it. They use the shit out of it. From the 5 year old learning English on Duolingo, the 20 year old lurking Zalo or zing.vn, to the 80 year old granddad snapping pics of his orchids and mango tree - they are ALL on facebook. Thus, EVERYONE is on the internet. Unfortunately this time I didn't travel to the more remote regions, so I do not know about those. But I can imagine the network effects.
The craziest thing is, coming from a 'developed' first world country in the EU, I have to say Vietnam, and all its people are so infinitely more dynamic than most of Europe. One might say it is due to the youth of the population with the low median age, but it is more the openness of the old to technology that surprises one.
Here, many elders are exceptionally wary of the internet and privacy is hold in high regard (which I think is good!) while in VN everyone readily embraces its possibilities. It's a kind of 'use now, worry/fix later' attitude. Or actually:'use if works, y worry?'.
What does this mean for the future of Vietnam, and the region? What does it mean for Europe; stagnating, left behind, or wisefully treading carefully? in the grand schemes of things and the world? I don't know. Apologies to everyone, I didn't plan to bother you with this wall of a text, maybe the recent impressions needed to be processed desperately. So to anyone who made it this far, thanks for reading dem brain spillings, dunno what to think of it.
What I do know is though, my highest Flappy bird score was 163, and it was the cause of two exams missed.
The canals/waters are still very polluted though but everywhere I go there is construction :).
The whole mindset is more Western and business oriented in HCMC, due the city's history as a trade centre and its connection to the US. Hanoi is more conservative, plus it is where the Politburo sits after all.
The 'Communism' needs to be sorted out.
Yep, I agree wholeheartedly. It was already baffling in the city, if you went more remote it must seem surreal at first.
But then it actually makes sense. They have smartphones out of necessity, not (mainly) to play Candy Crush and netflix.
This reminds me of part of the Refugee debate in Europe when certain people complained and mocked those 'rich' refugees seeking shelter all the while holding expensive looking smartphones.
They don't get it. For those people, their wiko/samsung sf34-235-A5r-7/huawei/Iphone8 is compass, map, navigator, encyclopedia, communication tool and bank all in one. If we were refugees or poor third world inhabitants and smart, our mobile should be the LAST thing to give up... no need for sandals when you can have a portable computer swiss knife that fits in your pocket!
The handful of countries than have industrialized in the 20th century (Japan, Taiwan, South Korea) have taken similar paths that are very different than the policies suggested by the IMF and the World Bank. This Economist article, despite the positive tone, makes Vietnam sound more like the stalled developments in Malaysia than the success of South Korea.
That can't be stressed enough.
What has been done, by the IMF and associates, in the name of "development" have caused innumerable suffering. Of course, the people responsible of those policies not only are not challenged but generously rewarded.
I see IMF as a convenient externalization of responsibility by national politicians and people who voted for them and their disastrous policies. If the bottom falls out of your country, it's not necessarily someone's nefarious plot.
We are talking about disastrous policies imposed from the outside with, yes, normally, the compliance of a local corrupt establishment.
I recommend reading this: https://www.globalpolicy.org/component/content/article/209/4...
Then there's always that option of not taking IMF money.
Is there? Who have this option when the people in power is going to profit immensely.
The IMF is an institution that have expired its utility. It made sense when there was fixed exchange rate between countries.
Since then, it has mutated to an instrument to impose policies that doesn't work. That's a fact.
We could, I suppose, argue about the reason of why those policies are imposed and not others. It could be profit or it could be ideological but we can't argue about the results in contraposition to the results of countries that don't follow that development path.
What might they be?
Because that was what the discussion was about in this thread, or not?
I mean, why is not the IMF advising that?
As recently as 1997 https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp0121...
As you can see, it worked fairly well, though it involved some painful changes certainly disdained by many people at the time. (The dismantling of Daewoo, for instance).
And in many cases, those attempts failed by the 70's
If those in power are corrupt to that extent, then the country is screwed no matter what the IMF does.
In the case of Europe, the CEB is acting as enforcer. When you don't control your central bank you have very few options. In fact, you have surrender your sovereignty.
As someone else said, one's economy has to be in a shambles before the need for IMF loans comes up. If you run your economy and government well, you don't need the IMF.
The IMF is a convenient scapegoat for irresponsible governments that brought on economic crises. When those governments are democratically elected year in and year out before the crisis, the fault ultimately lies with the people of the country who want to take out more than they put into the economy.
Even if the people are not venal, and simply cannot compete in an open marketplace with foreign labor and goods and therefore must depend on their governments for employment in protected industries, they must know on some level that they are living on borrowed time. Hopefully that will focus the mind and spur some people on to gain more skills. Unfortunately this latter group more often than not emigrates to other countries.
However, again as others have pointed out, post-communist societies like in east Asia and eastern Europe that have retooled their economies after profound tragedy show that it is possible to dig yourself out of a hole and catch up to the countries that never embraced collectivism. If the Chinese can rise from the ashes of the Great Leap Forward and Cultural Revolution and within two generations challenge the USA for economic supremacy, what is holding Greece and Portugal back, where things never got so bad?
Oh but rulers do opt out taking IMF money all the time...
Zimbabwe did for the past decade.
Angola just this year did ask for IMF money and then pulled back because the conditions were not acceptable.
Half of Africa is getting into all sorts of alternative deals (China..) for the same reason.
++++ edit
And those unacceptable conditions ?
- please be less corrupt... - at least try to have some sort of checks on how the funds are spent - there are other things than building stadiums and palaces
unacceptable
And if they not change, should I assume mala fide or craziness?
Because I have some problems with the craziness theory.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PP...
A lot of this probably has to do with the fact that the Soviet bureaucracy was imposed by an occupying force that was loathed, and once that rule ended, Estonians went back to basics, something they had had before WWII and something entirely new.
Nobody in Eastern Europe would even hint at communism these days, so many died and were oppressed ...
This is very different from Vietnam and China wherein they are 'post-Communist' countries trying to 'outgrow' their 20th century communist ideals and find a 'new way'.
I suggest both in China and Vietnam the political apparatus still believes they 'adhere to communist principles'.
Very different from East Europe.
Cultures and histories are so different it's hard to compare.
Arguably, China has had a lot of 'red tape' to deal with for a few thousand years :)
The Chinese call their system "socialist market economy" but I would call it "communistic capitalism" (communistic administration system, capitalistic economy).
However, Estonia is well ahead of its Baltic neighbours in e.g. Transparency International corruption ranking, and a world apart from former colonial power Russia. Compare the percentile rankings (90 % means that country is better than 90% of world):
Estonia 79%, Latvia 63 %, Lithuania 66 %
Compare to Finland 98 %, Sweden 99 %, Germany 93 %, USA 86 %, UK 90 %, China: 33 %, Russia: 13 %
I believe it was pushed though in the 19th century US by popular support. I think you also see that happening in China, albeit with the hobble of a less open media environment delaying communication of problems to those with authority.
The places that have a dynamic spirit in them, like Estonia, are special. They were a swedish domain and then under german rule with hanseatic league, thus creating tradition of good governance, before russia took over. I don't know of this explains anything, though.
> Vietnam has done a much better job of keeping
> politics out of private industry
Running a company that's competing with another company who has connections with the gov't? You're screwed.
http://english.vietnamnet.vn/fms/business/159912/start-up-co...
You know things are changing when more and more American Vietnamese are coming back to start businesses here.
There's good and bad ways to feed a boom in the short term. I hope Vietnam figures it out. I was there for a month earlier this year and it's a fantastic place.
https://en.wikipedia.org/wiki/Four_Asian_Tigers
Thailand, Malaysia, and the Philippines aren't in the same league.
Not sure what qualifies as back on track, but all of those economies have been growing strongly since the crisis.
Average annual GDP growth from 1999-2015: [1]
- Malaysia: 5.2%
- Thailand: 4.1%
- Philippines: 5.0%
Can you elaborate on this? I know nothing about either their policies or the IMF+World Bank's policies. What are they and how do they differ?
To poorly summarize the book, the path that works is
1. Land reform to give small plots to families. This boosts yield and turns unskilled labor into foreign currency.
2. Protectionist policies balanced by government requirements to export so companies have to innovate instead of milking the local market.
3. Financial controls to prevent capital flight and make capital available to strategic industries. Often at the expense of savers.
I highly recommend this book to anyone interested in History, Economics, or Current Events.
1. Land reform 1918.
2. Protectionist policies, import restrictions and increasing exports trough war reparations after WWII.
3. Strict financial controls and industrial policies. Finland ended financial controls in 80's. (Most Nordic countries ended their financial regulations in the 80's).
The White faction won the war, and it ended in a bloodbath. with the Reds severely repressed. But the law about land reform was approved two months after the civil war ended.
Twenty years later, when Soviet Union attacked the country as Stalin believed the Reds still wanted a retribution, he faced a unified nation where the sons of Reds and Whites alike fought together, well enough to avoid occupation at the end of WWII, though the reparation payments were heavy indeed.
And then, at present day, many people say that "the land reform was the biggest mistake of the century" because it created lots of small farms instead of big, centralized agriculture.
Anyway, giving people a patch of their own land seems to be a good way to commit them to defend and work for it.
If U.S. hadn't been willing to play ball with their protectionist, export-centered industrial policies from the 1950's through the 1970's, the story could have been very different.
The most-favored-nation status came trough GATT agreement 1947 and it was not US favoring other countries. It was trade agreement. Japan joined 1955.
After 1979 Tokyo Round agreement, Japan had the lowest average tariff level among industrial countries, 2.5 percent against 4.2 percent for the US.
Before 1980, most of the friction in trade was generated by U.S. industries seeking protection from Japanese imports, including textiles, steel, televisions, and automobiles. Japan solved all these cases by agreeing to to voluntarily restrain exports of the disputed items.
Japanese markets were ridiculously hard to penetrate, but often the reason was not trade barriers. Usually it was just different customer preferences and sales channels. For example, at one time US companies offered cars to sale in Japan with left-hand side steering and complained about sales.
Japanese have very protectionist agriculture policies but this seems to be universal for everyone.
The IMF and the World Bank both predate those "policies". And they were giving loans and advise before.
Truth is: they're an easy scapegoat. It's that simple.
Countries have succeded by following the IMF/WB "Neo-Liberal" advise and other countries have failed by doing the same. Countries have also succeded by not following the IMF/WB "Neo-Liberal" advise and other countries have failed by the same.
Most of the time, local politics is the real issue.
Not necessarily what the IMF tends to like to do.
Hong Kong/Singapore just did the latter. China, Japan, Taiwan, SK all did/do the former too.
The IMF/World Bank thinks that countries should tear down trade barriers and take on external debt, not build them up and run a current account surplus.
I generally take it as an axiom that efficient markets benefit all participants, and increasing trade barriers would seem to make the market less efficient.
Would you rather have the more efficient version where all the benefit goes to a small number of rich foreigners or the less efficient one with local distribution of benefits?
If you assume comparative advantage is static and a 3rd world country will always be a 3rd world country, removing trade barriers appears to be more efficient.
In the 1840s it was used to justify exporting food from Ireland while the Irish died in a famine: http://www.historyireland.com/18th-19th-century-history/food...
So it's not like this is news.
Their GDP growth has been consistently >5% over recent years (500% in 20 years) except for 2009, and there is a lot of foreign investment coming into the country.
It's a pretty amazing place to visit, you can sense the opportunity. Capitalism is doing wonderful things for them, far better than they were under either of the communist regimes.
There is also a large now successful Vietnamese Diaspora in the US and perhaps other countries that are familiar with Vietnam and might want to do business there.
If they then left as refugees to U.S. and now come back as investors, it's likely that they invest to the places they know and remember, i.e. the south.
https://www.youtube.com/watch?time_continue=1322&v=YbwJ6F3sI...
I'm recently back on the market for a (software engineering) job. If anyone has any leads for a westerner to find work in Vietnam, I'd love to talk to you.
Trade accounts for roughly 150% of national output, more than any other country at its level of per-person GDP.
So they must be doing a lot of assembly work. For example, I believe there are no semiconductor fabs.
GDP measures the value created in economy.
GDP can be calculated in different ways but they add up to the same value. GDP is sum of all gross value added and final consumption minus value of intermediate consumption. Alternatively it's the sum of primary incomes distributed by resident producer units.
If you manufacture a trinket that is sold for consumer for $100 but it costs $90 to manufacture, only $10 is added to GDP.