Vietnam: Another Tiger in the Making?

Ever since the initiation of the policy of renovation (Doi Moi) in 1986 aimed at transforming an economy, which has been described as “thirty years behind Taiwan, twenty five years behind Malaysia, twenty years behind Thailand, twelve years behind China and eight years behind Indonesia in terms of overall development” (Chu Huu Quy 1996: p. 18) by creating a market-oriented economic environment, the economy of Vietnam witnessed major changes in terms of growth and structural change.1 During 1986–90, GDP recorded an annual average growth rate of around 4 per cent followed by a much higher growth rate of 8.9 per cent during 1991–96. While the Asian financial crisis humbled even the star performers of Southeast Asia, the economy of Vietnam managed to traverse through the troubled waters recording an ACGR of 6.5 per cent during 1996–2001.2 The tempo of growth has been maintained in 2002 and 2003 with a recorded annual growth rate of 6.4 and 7.1 per cent respectively (ADB 2004). To go beyond the growth rates, rate of inflation, though accelerated, stayed below 10 per cent. The share of exports and imports in GDP increased from 22 per cent in 1990 to 50 per cent and 62 per cent respectively in 2001 and 2003 and the level of depreciation of Dong was much low as compared to other Asian countries. Population under the poverty line declined from about 58 per cent in 1993 to 37 per cent in 1998.