Secret of Vietnamese miracle

At a recent discussion in the city held virtually, economists, business leaders and others set Vietnam's economic success story as an example for Bangladesh to emulate. Titled, 'Vietnam's Superb Export Performance: Lessons for Bangladesh', the webinar's discussants dwelt at length on how Vietnam achieved its economic miracle. Of course, the issues that figured prominently in the talk included how Vietnam accomplished this economic feat through trade liberalisation, how it complemented external trade liberalisation with domestic reforms by way of deregulation, its success in reducing cost of business, its huge public investment in human and physical capital and so on and so forth. True, no one can deny the positive impacts of these measures on the growth of the manufacturing sector as a driver of the external trade. For had Vietnam not taken the measures as noted, it would remain a centrally planned socialist economy or 'command economy, as Western writers would like to term it. Vietnam went China's way of a state-controlled market economy. So, once the Vietnamese leadership decided it should open its market to facilitate inflow of foreign investment, the rest followed.

But did Bangladesh also not take similar steps before Vietnam?  Bangladesh's economy and physical infrastructure were in a shambles after the nine months' liberation war against Pakistan. So was the case with Vietnam that fought a still longer-two decades long-national liberation war against a superpower, the USA.

In the post-war years, Vietnam's economy took a nosedive with the inflation rate soaring to more than 700 per cent. The value of the country's import was more than its export.

As such, Bangladesh and Vietnam seem to have many similarities. Then where did they part ways so that Vietnam rocketed to its miraculous success having left us way behind? In fact, liberalisation, deregulation, reform, etc are basically maxims about economic growth under market economy. These are the general principles, the pre-conditions, but they say nothing about the specifics.

In the pre-pandemic year of 2019, Vietnam's GDP stood at US$ 261.9 billion, whereas for Bangladesh, it was US$302. 6 billion. Looks like Bangladesh is ahead of Vietnam! That is true on the face of it. But up close, considering its population size, Bangladesh is a larger country. As such, it should also be an economy larger than Vietnam. In 1984, Vietnam's population size was around 75 per cent (actually 78.61 per cent) of that of Bangladesh. But in 2019, the ratio stood at 59 per cent. That means with close to 60 per cent of our population, Vietnam is now running neck and neck in the economic race and given its pace of progress it would soon surpass Bangladesh.  All this progress came within a span of three decades.

The Vietnamese leadership was far-sighted enough to have adopted the so-called 'Doi Moi' reform policy (in Vietnamese, Doi Moi stands for 'restoration') under which in 1986 it first framed the law on foreign investment. This law enabled Foreign Direct Investment (FDI)'s unfettered flow into the country. But the road was not smooth as after the end of the war the country was in diplomatic isolation from the West for 20 years. Since then, Vietnam reformed its foreign investment law several times to remove whatever barriers were left to ensure freer entry of foreign investment into the economy.

However, these policies adopted by Vietnam are well known. But what lay behind those being so effective? What then came in the way of some other South and Southeast Asian nations that pursued similar economic policies?  Why were they not equally successful? Firstly, the Vietnamese leaders have the political will. They are single-minded in their objectives. Secondly, they are an incorruptible lot. Such qualities of leadership are rare in most other nations. Thirdly, the post-war Vietnamese society was a highly disciplined one. The workforce, too, was a highly disciplined and motivated one. Finally, since the beginning, the government has been stable and there has been continuity in its policies. All these features factored into the country's growth. And here lies the real secret of Vietnamese miracle.

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