Vietnam’s Distinctive Approach To Socialism?

Ben Ho

10/30/2024

General Secretary Nguyen Van Linh delivered a speech at the National Congress Party IV.

Five million tons of bombs and an indescribable amount of chemical substances were intermittently dropped on Vietnam from 1959 to 1975.

The country struggled under the centrally planned economy during the Subsidy period—the Bao Cap Period—in which it chronically faced severe shortages and hyperinflation; however, a series of renovative reforms were induced, also known as the Đổi Mới, in 1986.

The reform marked the greatest turning point of the stagnant country, transforming Vietnam into a socialist-oriented market economy.

This led to rapid industrialisation, global integration, and economic expansion. Nowadays, Vietnam plays a key role in the world supply chain and aims to become a developed nation by 2045.

Nevertheless, Vietnam’s ambiguous yet astonishing development in recent years might have captured our attention, propelling us to ask, “How did Vietnam miraculously do this?”

The Đổi Mới period was perhaps one of the answers to the question.

During that time, Vietnam's economy was controlled by the state, specifically state-owned enterprises (SOEs).

Because of this, there was no competition or incentive to innovate.

This system decreased productivity and growth, leading to stagnation and crisis; therefore, the government allowed private companies to participate in the country’s economy.They were permitted to compete against the SOEs.

A lot of privileges were given to private-sector workers, such as reducing taxes and giving subsidies.

Another significant change that occurred during the reform was agriculture.

Farmers were given the right to lease and cultivate their land, and they could sell their surplus produce in markets.

The transition from collective farming to a market-based system dramatically boosted food production and household incomes. As a result, agriculture played an important role in this period, contributing up to 60% of income in rural areas.

Soon after, private enterprises were even encouraged by the Communist Party of Vietnam in commodity production.

In 1987, a Foreign Investment Law was passed to attract foreign capital for local development. This helped to create a framework and to provide protection for investors.

In 1991, Vietnam normalized its relationship with China.

The impacts of the “Đổi Mới” reforms were incredible: rapid economic stabilization after years of crisis, inflation dropped, exports grew, and poverty rates declined.

By the early 1990s, Vietnam was clearly on a path to recovery, with GDP growth averaging 7-8% annually.

The Đổi Mới reforms laid the foundation for the socialist market-oriented economy. It fostered competition, innovation, and integration into the global economy, positioning Vietnam as a rising economic power in Asia.

The modern Saigon in 2019.

APEC 2017.

In conclusion, Vietnam’s unique path is considerable. The art of blending between state authority and nationwide free-market templates is characterized by a phrase: “Socialist Oriented-Market Economy.”

By embracing private enterprises, foreign investment, and trade liberalization, the country escaped poverty to become an important player in today’s world economy.

Strategic and comprehensive partnerships, especially with China and the U.S., fuel the rapid growth. As Vietnam strives for its forthcoming goals of becoming a developed country in 2045, its ability to balance socialist principles and global integration remains a testament to its resilience and adaptability.