Doi Moi Reforms for Vietnam’s Economic Development

Doi Moi Reforms for Vietnam’s Economic Development
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Q1: Vietnam’s Economic Development before Doi Moi (Challenges and Opportunities)
Doi Moi, translated directly from Vietnamese as renovation or innovation, are specific reforms started in the country to create a socialist-oriented market type of economy (Vu-Thanh, 2022). This socialist-oriented market economy was particularly encouraging for privately-owned organizations, where even the agriculture industry followed suit to adopt private land ownership and use, away from collective farming. Before Doi Moi was established, the Vietnamese economy made it one of the poorest countries globally, which followed the Soviet Union’s system (Rama, 2022). During this economic climate in Vietnam, the gross domestic product (GDP) stood at $200 only (Rama, 2022). The challenges faced by Vietnam before Doi Moi were;
* Poverty due to high populations living in rural areas
* Low literacy levels
* Inexistent business and markets
* Reduced grants and aid from the Soviet Union
* Food insecurity
* Inadequate technical and technological infrastructure
* No access to capital markets
However, there also existed some advantages before the adoption of the Doi Moi reforms;
* Citizens were aspiring to change their economic environment
* Young demographics, meaning a more productive workforce
* Greater focus on education to help improve the economy in the long-term
* Absence of the resource curse, where mismanagement and interference by foreign entities would have created more economic downturns
* The Vietnamese government was open to innovations and bottom-up approach to development
* Favorable geographic position for trade
Q2: Doi Moi Reforms Applicable and Scalable in other Developing Countries
The Doi Moi reforms brought about economic development and stability in Vietnam, where there has been a positive real GDP growth (CAGR) since 1986 (Vu-Thanh, 2022). The specific reforms that could be applicable and scalable in other developing countries to achieve economic growth are
* Private land-use rights awarded to private farmers
* Recognition of private businesses as legal entities and leeway to conduct business independently
* Allowing State-Owned Enterprises (SOEs) the capacity to operate with autonomy, removing any command and control over the economic system grabbed by the central government
* Introducing investment and legal measures to offset the advantages provided by established SOEs so that an equal and level playing field is created, as well as fostering similar opportunities to public and private organizations.
* Providing Foreign Direct Investment (FDI) with inviting incentives and establishing industrial zones with preferential tax allocations.
* Embracing the international trade and globalization trends
* Embracing the bilateral trade agreements (especially with the United States), as well as entering in...