Communism Part 2 of 3: Economic Development in Vietnam
For the previous thirty years, Vietnam had relied on the Soviet Union in all three of these areas so much that without the support, they were lost. They were extensive trade partners, especially after Vietnam implemented the EOI discussed earlier. In addition, the majority of Vietnam’s foreign direct investment came from the Soviet Union.
Finally, advanced weapons sales from the Soviet Union helped build Vietnam into the strongest military power in Southeast Asia. However, with the collapse, Vietnam was left without a major trading partner and a diminishing supply of weapons. Attempts to reach out to other parts of the world were generally unsuccessful due to instable and weak international perception of communism. Countries were wary to involve in trade with countries like North Korea and Vietnam, and even more unlikely to invest in economies that stood above average chances of crumbling. The results were immediate international alienation, few allies, a weak economy, low GDP, and high debts from their civil war.
However, after the immediate backlash from the end of the Cold War, Vietnam was able to salvage some aspects of their economy. In 1986 they had started an economic restructuring reform campaign known as doi moi that truly saved their country from falling tremendously behind the rest of the world at the time. The goal of the program was to make the economy more open to the West in efforts to boost cooperation in a time when the Soviet Union appeared to be struggling. Thus, when it needed to, Vietnam was able to take advantage of its supply of oil and produced food and export some to fuel the economy.
The results were promising, with average annual GDP growth reaching 9% from 1993 to 1997. However, Vietnam had burned to many bridges in the past with their communist ideals and actions during the civil war. The United States had placed heavy trade embargos on Vietnam and many other countries were also reluctant to develop long-term relationships. The situation was worsened in 1997 with the onset of the Asian Financial Crisis, which left the Vietnamese banking system in shambles and again proved to the rest of the world that Vietnam was weak and unable to compete in the global market. In response, the government spoke out against market-based economies and their detrimental effects, much in the same way the Soviet Union had done years before when pursuing an alternative to capitalism.
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