Forty Years of Impressive Economic Growth
- K.C. Adams -
Hai Phong International Container Terminal.
The U.S. imperialists during their war of
aggression to conquer Vietnam caused horrendous
destruction to the people and their economy. Since
the U.S. military was defeated and forced to leave
in 1975, the people of Vietnam and their
leadership have made remarkable advances in
overcoming difficulties to rebuild the country and
economy to achieve today what they term as
"moderate prosperity." Pursuing a line of
independence and determination to become a modern
developed economy with a scientific industrial
base of mass production, they have given rise to
significant changes to improve the productivity of
the working class and peasantry and increase the
living standards of all.
According to Nhan Dan, Central Organ of
the Communist Party of Vietnam, and the Vietnam
News Agency the economic achievements have been
impressive indeed.
During the period from 1986 to 1990 after the
initial trauma and destruction of the U.S. war of
aggression had been overcome, annual GDP growth
began to average 4.4 per cent. From that initial
growth in developing the industrial base and
productivity of the working class and peasantry,
the GDP figure improved to seven per cent annual
growth from 1996 to 2000.
In recent years, while sustaining high annual
economic growth, emphasis has shifted to the
quality of development. The efforts resulted in
Vietnam managing in 2020 "to sustain a growth rate
of nearly three per cent despite the tremendous
negative impacts of the COVID-19 pandemic, making
it one of the few economies with positive growth
in the world," according to Nhan Dan.
Nhan Dan continues, "The size of the
economy has grown substantially to about U.S.$262
billion in 2019, an 18-fold increase compared with
1986 [...], while the income per capita reached
U.S.$2,800, standing among the middle-income
countries. Labour productivity also rose from an
annual average of 4.3 per cent during the
2011-2015 period to 5.8 per cent during the
2016-2020 period. The contribution of total factor
productivity in the past five years was estimated
at 45.2 per cent, compared with the target of
30-35 per cent."[1]
The overall makeup of the economy is shifting
from a rural agricultural one with heavy reliance
on manual labour to a more industrial urban base
of mass production using sophisticated machinery
employing educated workers.
Careful regulation of the supply of the
Vietnamese currency in circulation has kept annual
inflation to around four per cent during the
2016-2020 period. In this a big effort was
required with its international trade and the
foreign currency market to reduce "dollarization"
of the economy. This has resulted in an increase
in foreign currency reserves of social wealth, and
enhanced international confidence in the domestic
currency, the Vietnamese Dong.
Nhan Dan reports, "The national
infrastructure system has been greatly modernized,
especially transport infrastructure. [...]
Domestic consumption and investment continue to be
two important pillars of the economy. Total retail
and services revenue has grown continually,
averaging 12.8 per cent during the 2011-2014
period. With the development of technology, the
retail market is shifting from traditional to
modern channels. Retailers have quickly adapted to
changes in consumers' behaviour and taste, with
online shopping increasingly favoured. The
mobilization of resources for development
investment has been promoted, with total
development investment increasing by 10.6 per cent
on average during the 2011-2020 period."
Improvements in availability of credit have also
been an important factor in providing additional
investment for the economy.
Nhan Dan says that social wealth from the
state budget and through issuing government bonds
has mainly been spent on key socio-economic
infrastructure projects. These state investments
account for 20.8 per cent of total social
investment. Investment from the non-state sector
increased rapidly from 36 per cent in 2010 to 46
per cent 10 years later. Foreign direct investment
has also played a role in modernizing the economy
with large-scale high-tech projects.
Vietnam's integration into the world market of
trade and commerce has meant the negotiation and
completion of many bilateral and multilateral
trade agreements. This past November Vietnam
hosted the virtual summit of the Association of
Southeast Asian Nations at which a Regional
Comprehensive Economic Partnership was signed on
the sidelines. This economic partnership is the
largest in the world and includes not only the 10
members of ASEAN but also five others covering 2.2
billion people. The countries signing the
agreement include the 10 member states of ASEAN;
Vietnam, Thailand, the Philippines, Laos,
Cambodia, Myanmar, Malaysia, Singapore, Indonesia
and Brunei -- along with Australia, China, Japan,
New Zealand and south Korea.
Nhan Dan reports, "International economic
integration has strongly bolstered Vietnam's
international trade. From a country with a large
trade deficit, Vietnam has managed to reach a
trade balance, and even register a trade surplus."
It says the international agreements have helped
Vietnam "diversify its external economic
relations, thus reducing reliance on a single
market. Vietnam is currently exporting its goods
to more than 200 countries and territories."
Nhan Dan writes, "Despite the impact of
COVID-19, Vietnam still posted a record trade
surplus of U.S.$20.1 billion in the first 11
months of 2020."
It continues, "The world in the early 21st
century has seen many rapid changes and
international relations are becoming increasingly
complicated and unclear. The COVID-19 pandemic,
climate change, extreme weather and severe natural
disasters in 2020 have reinforced the above trend.
No rigid and standard system of solutions can be
effective for the country's socio-economic
management. Being aware of this, the Party and
State have determined that better mechanisms are
needed to increase economic resilience to shocks.
"Vietnam has proactively built a modern economic
structure, created the foundation and room for
macroeconomic policy implementation, gradually
mastered advanced production technology, improved
the position of enterprises and the economy in
global value chains, and diversified markets and
trade partners.
"It can be seen that with each challenge faced,
the Vietnamese economy can teach itself, test the
effect of policies on life, the relationship
between theory and reality in order to learn a
lesson for the next stage. The culture of learning
from macroeconomic policy implementation will help
Vietnam to always be prepared for new uncertain
circumstances."
Note
1. Labour
productivity is generally defined as the number
of standard work hours required to produce a
certain quality and quantity of goods or
services. Less work-time required to produce a
similar quality and quantity of social product
is considered a gain in productivity.
Productivity growth generally means more fixed
and circulating value from machinery and
material is used in production compared with the
standard work-time required from active workers.
Productivity can also increase from better
organization and training of the workers
involved in production.
Total factor productivity is a measure of
productivity calculated by dividing the
economy-wide total production, usually measured
as Gross Domestic Product, by the weighted
average of the amount of standard work-time and
fixed and circulating value (machines and
material) that went into production of the GDP
or total social product. The growth of actual
output of social product, not its value in
standard work-time, versus the inputs of
standard work-time and fixed and circulating
value represents a real growth in total factor
productivity. (More food and other goods and
services using less standard work-time.) This
generally results from improvements in the
application of science and technology to
production, using fewer but better trained,
educated and organized workers and improved more
efficient machinery and equipment etc.
This article was published in
Volume 51 Number 4 - February 14, 2021
Article Link:
https://cpcml.ca/Tmlm2021/Articles/MS51044.HTM
Website: www.cpcml.ca
Email: editor@cpcml.ca
|
