Light Within the Asean Gloom?: Vietnam´s Economy since the Asian Financial Crisis

Abstract

The Vietnamese economy has performed rather well in recent years. While there are a number of conflicting opinions on the state of the economy, with many arguing that there are fundamental economic weaknesses (such as the likely formal bankruptcy of the state commercial banks),2 it is nevertheless striking how the economy has grown rather fast, and how macroeconomic stability has been maintained. This article will focus upon a review of the books, that is, the picture revealed by the economic statistics, and examine briefly some of the competing explanations for this outcome. One striking aspect of discussions on the Vietnamese economy, however, is the frequency with which it is referred to as suffering from fundamental weaknesses, despite the evidence of considerable success. Perhaps the success would have been even greater had different policies been followed; or perhaps, as is common with other Asian economies, some economic perspectives need adjusting. The article begins with a discussion of the recent background: an overview of the 1990s prior to the 1997 Asian crisis, and then an examination of the 1997 crisis will be compared with the current situation, as the global economy confronts the consequences of the excesses of U.S. capital markets in the late 1990s and 2000. The article then addresses the important issue of globalization, given that Vietnam's exports are now close to 50 per cent of gross domestic product (GDP), before looking in detail at the current economic situation. It turns out that much of the current situation is illuminated by looking at the historical trends apparent in the 1990s, and the impact and influence of the 1997 crisis, which makes the story of the present less confusing.