Morning for Vietnam?

Friday, April 01, 2011

Reader Dismuke emails me with a link to a story by Joel Kotkin of New Geography (whose work I have cited several times here before) about Vietnam's burgeoning economy:

Le Dang Doanh, one of the architects of Vietnam's economic reforms, which were known as (Doi Moi) and launched in 1986, estimates the private sector now accounts for 40% of the country’s GDP, up from virtually zero. But Le Dang estimated as much as 20% more occurs in the "underground" economy where cash -- particularly U.S. dollars -- reigns as king.

"You see firms with as many as 300 workers that are not registered," the sprightly, bespectacled 69-year-old economist explains. "The motive force is underground. You walk along the street. I followed an electrical cable once and it led me to a factory with 27 workers making Honda parts and it was totally off the system."

After years as a Communist apparatchik, Le Dang now has more faith in markets than is commonly found in the American media or U.S. college campuses. Trained in the Soviet Union and the former East Germany, Le Dang saw up close the "future" of a state-guided economy and concluded it doesn't work. He noted that in agriculture farmers produce 50% of the cash income on the 5% of land that they can call their own. He also mentions proudly that his son, born in 1979, works for a private Hanoi-based software firm.
Kotkin provides other interesting details and claims that the Vietnamese are "develop[ing] a taste for self-interest." That said, I would hardly say that Le Dang himself has necessarily had anything like Boris Yeltsin's "supermarket epiphany." Vietnam remains a one-party state, and the fact that it has such a large underground economy also implies that it only has relatively more freedom than in the past, and not capitalism. Things are better there than in the past, but the prerogative of its communist rulers apparently remains unchallenged, which means that its gains are at their mercy.

Nevertheless, the nation could be poised to benefit from substantial Western cultural influence in addition to increased expectations of prosperity. If its people begin to understand why government acting beyond its proper scope is dangerous, perhaps they will use their skills at "running beneath the official radar" long enough to achieve a Vietnam in which they no longer will need to on a daily basis.

-- CAV

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