Abstract

Under the traditional socialist central planning system, economic growth in China and Vietnam was unstable and not very satisfactory. Yet, both countries achieved a remarkable progress in the area of human development. Later, under the market socialist model, China and Vietnam achieved very high rates of GDP growth, and malnutrition declined significantly. Yet, income distribution and the provision of key public services deteriorated in both countries. Progress in reducing child mortality in China was relatively slow, before improving in the early 2000s. Although Vietnam is much poorer than China, and has been growing less fast, its record in this area was markedly better. We show that this apparent paradox is due mainly to the fact that the negative side-effects of market-oriented reforms have reached a more advanced and alarming stage in China than in Vietnam. Our results also suggest that an additional factor is constituted by a relatively better status of women in Vietnam with respect to China. However, we also warn that signs are emerging in Vietnam too, indicating that it is entering a stage of development where the social problems now evident in China are starting to manifest themselves on a large and worrying scale. Our policy conclusions advocate in favour of re-establishing (in a new form, compatible with the maintenance of the economic dynamism of the market socialist system) some positive features of the pre-reform socialist model, among which universal public provision of basic public services is paramount.

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