This picture show that Viet Nam’s in the late 1980s.

Beginning in the late 1980s, Viet Nam’s communists implemented a new plan toward economic and social modernization, called “Doi Moi.” Its goal was to increase foreign investments, tourism, encourage small private enterprises, and increase overall economic growth while still allowing the communists to retain their political and economic control. This plan was very similar to China’s modernization plan. Up until 1998, it was largely successful as Viet Nam’s gross domestic product (GDP) grew about 9% each year from 1990 to 1997.

However, since then, Viet Nam’s economy has stagnated. There were several reasons for this slowdown. A large part of this was due to the Asian financial crisis to 1997 that significantly weakened the economies of many of Viet Nam’s biggest investors and export markets. Because businesses in other Asian counties weren’t doing very well, they had less resource to by goods made in Viet Nam. Another reason is that banks and investment companies from Asia and Europe were becoming more selective in financing development projects. As I mentioned, almost all of Asia was hit hard at this time. As a result, foreign investment fell from $8.3 billion in 1996 to $1.6 billion in 1999 and GDP growth slowed to about 4% in 1998, but has since picked up to around 6% in 2002. Analysts point out that this economic slowdown highlights Viet Nam’s greatest weaknesses uncompetitive, inefficient, and unprofitable state run industries, a weak banking system, and inefficient state enterprise sector, falling export growth, and most importantly, rampant government corruption.


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