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The economic development of Vietnam after the end of long-lasting war was quite complicated and controversial. The infrastructure destroyed during the war almost to the full extent and the human capital lost due to the same reasons constituted additional difficulties for the communist authorities that tried to foster its economic development. In general, modern statistics reveal unsatisfied results of their policies because it seems that Vietnam did not reach the vast majority of the goals estimated in the Second Five-Year Plan. This plan adopted in 1975 became the first plan aimed at the development of the whole country after its reunification. Moreover, the historical differences in economic patterns between the South and the North contributed to the failure of this five-year plan. Nevertheless, despite the failure of the plan as a whole there were certain transformational changes in Vietnamese economy, especially in the economic system of the South.
In this paper we will outline the starting positions of Vietnam before the implementation of the Second Five-Year Plan. Then, we will analyze the changes and processes observable in the Vietnamese agriculture, industry and demographics within the given period. Lastly, we will evaluate the overall performance of the Second Five-Year Plan and its outcomes for the Vietnamese economy.
As we have already stated, the economic situation in Vietnam was rather complicated in 1975. After the Second World War Vietnam was a poorly developed agricultural country with few industrial objects. However, the Second Indochina War annihilated even this underdeveloped economic structure leaving Vietnam with entirely disrupted economy after the end of military confrontations. For instance, only in the North, 6 industrial cities and 28 out of 30 provincial towns were either damaged or destroyed. Simultaneously, the war left Vietnam without the whole infrastructure due to the heavy U.S. bombing. Undoubtedly, the disappearance of transportation routes led to the interruption in raw materials’ and consumer goods` processing. On the other hand, the loss of human potential in Vietnam was even more severe. Firstly, a lot of people died or became injured due to the war. Secondly, a quite big share of the South population decided to leave the country after the victory of the communist North. It caused the significant outflow of working force from the southern regions of Vietnam. Generally, the starting positions of Vietnam before the implementation of the Second Five-Year Plan were very difficult.
Now it is time for us to proceed to the analysis of the implementation of the Second Five-Year Plan in Vietnam. Firstly, it is worth mentioning that the communist authorities had quite optimistic expectations with respect to the restoration of the country and its economic development. Thus, the government set very voluntaristic indicators of growth in industry (16 to 18 percent), agriculture (8 to 10 percent), and national income (13 to 14 percent) (Global Investment Center 38). Another important objective of the plan was to wipe out any differences in economic patterns between the North and the South. Thus, the communist government was eager to launch the massive industrialization in both regions of Vietnam, especially in the North that had certain manufacturing before the war.
Going back to the agricultural domain it can be said that the communist government did not reach the intended rates of growth in it. What is more, the growth in agriculture was very uneven, varying from year to year. For instance, the Vietnamese agriculture had an impressive rate of growth in 1976, i.e. 10%. On the other hand, the negative rate was recorded in 1977, thus in 1977 the total level of agricultural output was even lower than in 1976. The Vietnamese agriculture succeeded in reaching the level of 1976 only in 3 years, i.e. in 1979. Therefore, such a weak pace of growth led to the problem of food shortage in Vietnam. This problem was quite severe because whereas the rates of growth in agriculture fluctuated close to the zero point, the Vietnamese population grew by more than 9% annually. Of course, the domestic production of food could not cover all the demand for it. This situation forced the government to ask for international aid and to buy provision from other countries. The Second Five-Year Plan failed to resolve the problem of huge gap between the demand and supply of food in Vietnam.
Furthermore, communists decided to conduct the broad collectivization in the South. However, this policy was negatively received by the population. People living in the South had historical predisposition towards private property because till the victory of the communist North, the South followed the capitalist way of economic development. It is no wonder that the collectivization conducted upon the voluntary basis was unsuccessful, forcing the communist government to switch from voluntary methods to more coercive policies. The South that was the traditional center of agriculture replied with huge numbers of people running away from the new communist rule in the South Vietnam. Thus, collectivization became the first major reason why the Second Five-Year Plan failed to reach its goals in the agricultural domain. Unfavorable natural conditions, i.e. thunders, floods, and draughts, also contributed to the weak rates of growth (if any) in Vietnam. In total, the labor productivity in Vietnam fell dramatically during this period. Poor management combined with aggressive industrialization, lack of chemical pesticides, and the absence of agricultural machinery were among the major reasons that led to the decrease in productivity.
Now let`s proceed to the analysis of industry. This sphere was of the vital importance for the government because it considered it as a necessary step on their way to the construction of socialist society. The government had different goals for the North and the South. The major emphasis in the North was made on the restoration and consolidation of factories and workshops that were either damaged or destroyed during the war. In the South their policy was slightly different, i.e. government launched the policy of nationalization, trying to bring all industrial objects and banks of the South under its control. Undoubtedly, such policy negatively affected their performance, leading either to the zero growth or very weak growth of industry within the given period of time.
In 1977, the communist authorities adopted some amendments with respect to the management of factories and other industrial objects. These changes provided factory management with some kind of freedom and independence in formulating production plans and arranging production resources. However, these reforms failed because the general framework of central planning under which the Vietnamese economy operated contradicted any independent planning coming from the below (Hoa 8).
Therefore, the rates of growth of industry were even lower than those of agriculture, i.e. it constituted from 0,1% to 0,6% during the Second Five-Year Plan. Moreover, if we consider the ever-increasing number of population we will get quite disappointing result that the value of output per capita fell by more than 8% from 1975 to 1980. For example, coal mining did not receive any impetus for the growth because of inappropriate management practice and the destroyed railway connections that were vital for normal operation of mining sites.
Light industry also countered big economic difficulties because its functioning was heavily dependent on the economic activity in agricultural sector. Of course, when the channels of agricultural raw materials dried up, it led to the severe disruptions in the operation of food-processing enterprises. Moreover, the continuing shortages of food led to the deterioration of workers` motivation and, thus, significant decrease in their productivity.
All in all, the failure of the Second Five-Year Plan can be explained by both external and internal factors. Consequently, some of the internal factors might have been influenced by the domestic policy of the communist authorities, but the bureaucratic inertia and poorly trained administrative cadres prevented them from implementing the changes needed to get the economy out of the turmoil. Their inefficient policies resulted in the annual growth rate of only 0,4% for the national income.
Moreover, the economic and political situation worsened in 1977 when the Vietnamese government decided to start intervention into Cambodia. The communist government hoped that the international community would support them in their fight against the Khmer Rouge, but the reaction was quite opposite. The global community considered the Vietnamese actions to be the breach of international law and the territorial integrity of Cambodia, thus the vast majority of western partners of Vietnam decided either to limit or even to discontinue the financial aid provided to this country, The most painful impact was done by Sweden and Japan which were the major Vietnamese donators.
In addition, in 1979 China invaded the North Vietnam, trying to force the latter to withdraw its troops from Cambodia. Although the results of this campaign continue to remain ambiguous, the impact of it on the economy of Vietnam was negative. Firstly, Vietnam was forced to reallocate more financial resources into its defense sector, and secondly, some important industrial objects situated in the North Vietnam were damaged due to the military confrontation.
Works Cited
Global Investment Center. Vietnam. Economic and Development Strategy Handbook. Washington DC: International Business Publications, 2008. Print.
Hoa, Tran Van. Economic Development and Prospects in the ASEAN: Foreign Investment and Growth in Vietnam, Thailand, Indonesia and Malaysia. London: Macmillan Press Ltd, 1997. Print.
Miguel, Edward & Roland, Gerard. The Long Run Impact of Bombing Vietnam. 2005. Web. 21 May 2016 < http://eml.berkeley.edu/~groland/pubs/vietnam-bombs_19oct05.pdf>
Schlight, John. War in South Vietnam: the Years of the Offensive, 1965-1968. Washington, DC: Office of Air Force History, US Air Force, 1988. Print.
Smith, John T. Linebacker Raids: the Bombing of North Vietnam. London: Arms & Armour Press, 1988. Print.
