Countries of the World/COUNTRYS.BIN/dp/0403/04036.txt

Text File | 1991-06-25 | 31KB | 510 lines

$Unique_ID{COW04036}
$Pretitle{232}
$Title{Vietnam
Chapter 3A.   The Economy}
$Subtitle{}
$Author{Tuyet L. Cosslett and William R. Shaw}
$Affiliation{HQ, Department of the Army}
$Subject{economic
percent
plan
production
goods
south
economy
vietnamese
million
vietnam}
$Date{1987}
$Log{Farmers Transporting Goods*0403601.scf
}
Country:     Vietnam
Book:        Vietnam, A Country Study
Author:      Tuyet L. Cosslett and William R. Shaw
Affiliation: HQ, Department of the Army
Date:        1987

Chapter 3A.   The Economy

[See Farmers Transporting Goods: To Market.]

     Since reunification in 1975, the economy of Vietnam has been plagued by
enormous difficulties in production, imbalances in supply and demand,
inefficiencies in distribution and circulation, soaring inflation rates, and
rising debt problems. Vietnam is one of the few countries in modern history to
experience a sharp economic deterioration in a postwar reconstruction period.
Its peacetime economy is one of the poorest in the world and has shown a
negative to very slow growth in total national output as well as in
agricultural and industrial production. Vietnam's gross domestic product
(GDP--see Glossary) in 1984 was valued at US $18.1 billion with a per capita
income estimated to be between US $200 and US $300 per year. Reasons for this
mediocre economic performance have included severe climatic conditions that
afflicted agricultural crops, bureaucratic mismanagement, elimination of
private ownership, extinction of entrepreneurial classes in the South, and
military occupation of Cambodia (which resulted in a cutoff of much-needed
international aid for reconstruction).

     In the 1980s, the country was at a crossroads between economic
liberalization and complete government economic control. It is possible that
the leadership changes undertaken at the Sixth National Party Congress of the
Vietnamese Communist Party (VCP, Viet Nam Cong Son Dang) in December 1986
marked the beginning of the end of an era dominated by revolutionaries who
emphasized security at the expense of social welfare and modernization. In
1987 Vietnam took practical steps to resolve chronic economic problems such as
rapid inflation, slow and erratic economic growth, deteriorating living
conditions, and severe trade imbalances. The new economic policy laid out at
the Sixth National Party Congress addressed these issues while avoiding others
such as high unemployment and substantial arrearage on foreign debt payments.

     At the party's Second Plenum in April 1987, a new, reform-oriented
leadership proposed measures that would give greater scope to the private
sector, reduce the budget deficit, and boost the output of agricultural and
consumer goods in order to raise market supplies and exports. Specifically,
the government sought to make prices more responsive to market forces and to
allow farmers and industrial producers to make profits. Barriers to trade were
lowered; the checkpoint inspection system that required goods in transit to be
frequently inspected was abolished; and regulations on private inflow of
money, goods, and tourists from overseas were relaxed. In the state-controlled
industrial sector, wage raises were scheduled, and overstaffing in state
administrative and service organizations was slated for reduction. Government
leaders also planned to restructure the tax system to boost revenue and
improve incentives.

     Earlier efforts to reform the economy had employed methods similar to
those proposed in 1987. These previous recovery policies, while achieving
short-term gains toward economic recovery, eventually faltered because of poor
implementation, lack of commitment, and decisions to industrialize and
socialize the country regardless of cost. The 1987 effort to cure Vietnam's
economic ills held more promise of being sustained, however. The power of the
new reform-minded general secretary of the party, Nguyen Van Linh, appeared to
strengthen as other reformers assumed key party Political Bureau positions.
Moreover, Soviet pressure to improve economic performance increased markedly
during 1987. A high Soviet official attending Vietnam's Sixth National Party
Congress pointed out Vietnam`s urgent need to reform and offered the Soviet
Union's own reform efforts as a model for Vietnamese programs.

Economic Setting

     In the 1980s, Vietnam was the world's third-largest communist
country--ranking below China and the Soviet Union and above Poland--and the
most densely populated. According to Vietnamese figures, the country's
population in 1985 totaled more than 60 million, with an average density of
179 persons per square kilometer. In comparison, the German Democratic
Republic (East Germany), ranking second in population density, averaged 154
persons per square kilometer. Vietnam's average annual population growth rate
was reported to be 2.5 percent (see Population, ch. 2).

Demography

     The 1979 census showed that more than 42 percent of the population at
that time was younger than 15 years of age and nearly 5 percent was 65 or
older. Furthermore, 71 percent of the Vietnamese population was 30 years of
age or younger.

     A population boom in the 1980s put pressure on food supplies and severely
taxed the government's ability to create jobs. Harvest shortfalls were
frequent, grain reserves remained low, and foreign exchange was extremely
scarce. As a result, overcoming even a short-term food deficit was difficult
for the government and costly for the people.

     In 1984 a United Nations (UN) nutrition specialist calculated the daily
average food consumption among Vietnamese to be only 1,850 calories per day,
nearly 20 percent less than the generally accepted minimum daily standard of
2,300 calories. In 1985, the Vietnam Institute of Nutrition reported average
daily intake at 1,940 calories. The institute also estimated that roughly 25
percent of the children suffered from malnutrition.

Labor

     The Vietnamese labor force in mid-1985 was estimated at 31.2 million,
having increased at the rate of 3.5 to 4 percent annually between 1981 and
mid-1985. A 1987 Vietnamese estimate put unemployment at more than 20 percent.
More than half of the work force was committed to agriculture; however,
observers estimated that the unemployment level in the agricultural sector was
very low because agricultural workers were more likely to be underemployed
than unemployed. In contrast, the unemployment rate in the nonagricultural
sector may have exceeded 40 percent, meaning that more than 2 out of every 5
Vietnamese workers were jobless. A similar calculation for the nonagricultural
sector in 1981 yielded an estimate of 20 percent, or 1 out of 5.

     Unemployment was particularly concentrated among younger workers living
in urban areas. According to Vietnamese government statistics, of the 7
million persons who entered the work force between 1981 and 1985, about 33
percent lived in urban areas, and only 15 to 20 percent reportedly had found
jobs. The actual ratio of jobs to unemployed people may not have been as grim
as statistics indicate, however. According to some observers, the high rate of
inflation during the period forced many people, especially state workers, to
take a second job in order to make ends meet.

 Vietnam's economic prospects for the late 1980s and early 1990s depended on
resolving population and labor problems. Government population projections in
1987 showed that the gender imbalance, with females more numerous, probably
would persist through the end of the century. National security concerns were
unlikely to diminish, and the armed forces were expected to continue their
high demand for males of service age. A similar demand also was expected to
continue in the sectors and occupations in which males were employed during
the 1980s: agriculture, fishing, mining, metallurgy, machine building,
construction, and transportation. Female workers probably would remain
concentrated in subsistence agriculture, light industry, and, perhaps,
for