Until French colonization in the middle of the 19th century, the economy of Vietnam was mainly agrarian and village-oriented. However, French colonizers deliberately developed the regions differently, designating the South for agricultural production and the North for manufacturing. Though the plan exaggerated regional divisions, the development of exports--coal from the North, rice from the South—and the importation of French manufactured goods stimulated internal commerce.Vietnam: a country study. Library of Congress Federal Research Division (December 1987). This article incorporates text from this source, which is in the public domain.
When the North and South were divided politically in 1954, they also adopted different economic ideologies: communism in the North and capitalism in the South. Destruction caused by the 1955–1975 Second Indochina War (commonly known as the Vietnam War) seriously strained Vietnam's economy. Across Vietnam, the situation was worsened by the country's 3 million military and civilian deaths and its later exodus of 2.1 million refugees, including tens of thousands of professionals, intellectuals, technicians, and skilled workers.
Between 1976 and 1986, for annual growth rates for industry, agriculture, and national income and aimed to integrate the North and the South, the plan's aims were not achieved: the economy remained dominated by small-scale production, low labor productivity, unemployment, material and technological shortfalls, and insufficient food and consumer goods. The more modest goals of the Third Five-Year Plan (1981–1985) were a compromise between ideological and pragmatic factions; they emphasized the development of agriculture and industry. Efforts were also made to decentralize planning and improve the managerial skills of government officials.
In 1986 Vietnam launched a political and economic renewal campaign (Doi Moi) that introduced reforms intended to facilitate the transition from a centrally planned economy to form of market socialism officially termed "Socialist-oriented market economy." Doi Moi combined economic planning with free-market incentives and encouraged the establishment of private businesses in the production of consumer goods and foreign investment, including foreign-owned enterprises. By the late 1990s, the success of the business and agricultural reforms ushered in under Doi Moi was evident. More than 30,000 private businesses had been created, and the economy was growing at an annual rate of more than 7 percent, and poverty was nearly halved.Vietnam country profile. Library of Congress Federal Research Division (December 2005). This article incorporates text from this source, which is in the public domain.
In 2001 the Vietnamese Communist Party (VCP) approved a 10-year economic plan that enhanced the role of the private sector while reaffirming the primacy of the state sector in the economy. In 2003 the private sector accounted for more than one-quarter of all industrial output. However, between 2003 and 2005 Vietnam fell dramatically in the World Economic Forum's Global Competitiveness Report rankings, mostly due to negative perceptions of the effectiveness of government institutions. Official corruption is epidemic, and Vietnam lags in property rights, the efficient regulation of markets, and labor and financial market reforms. Although Vietnam's economy, which continues to expand at an annual rate in excess of 7 percent, is one of the fastest-growing in the world, the economy is growing from an extremely low base, reflecting the crippling effect of the Second Indochina War (1954–75) and repressive economic measures introduced in its aftermath, as well as the effects of politically motivated sanctions put in place by the United States.
Pre-colonial Vietnam Vietnam under Chinese rule
Until the early 10th century, Vietnam—with many name variants adopted by various feudal kings—was mostly under Chinese domination, for approximately 1053 years.
The first domination occurred from 207 BC to 29 AD. A brief independent period followed with the coronation of female sister kings Trung Trac and Trung Nhi, which ended in 43 AD. The second Chinese domination was the period from 43 to 544 AD. Lý Nam Đế gained control of Vietnam from Chinese hands for about 60 years before the third Chinese domination, 603-907 AD. Historians tell us that a slave society was still prevalent in Vietnam in around 900 AD.Dang Duy Phuc (2006) Giản Yếu Sử Việt Nam, Hanoi Publisher, Vietnam. Hanoi, the then called Dai La, was described as having been a populous and thriving urban area since the end of the 9th century. Its residents and merchants traded silk, ivory, gold, silver, paddy rice and other agricultural products.
Besides fairly developed horticulture, artisans of urban Dai La were also able to master important skills for goldsmithing, copper casting and molding, and iron casting. Literate people of Dai La started using Chinese characters in their writing, although they were rarely recorded by historians in this period, while merchants had access to established market facilities. Economic life in historical Vietnam had much to do with the following history of warfare, economic policies by various feudalist governments—particularly those set by the most influential kings—and advancements made by many ordinary people while attempting to improve their economic well-being, many of whom would now be called by modern economic researchers entrepreneurs.
Economy of Dynastic Vietnam
Over 25 centuries of its history before the mid-19th century, Vietnam's economy had traditionally consisted of agrarian production and small-scaled handicraft industries. It was almost closed with negligible volume of foreign trade, and most of the time displayed a village-oriented autarky.
The economic life of an independent Vietnam should perhaps started with Lê Hoàn (941–1005)–the founding king of the First Lê Dynasty—who was rising to the kingship during the context of the demise of Đinh Tiên Hoàng and the threat of invasion by the Chinese Song Dynasty in 982. Being a king, Lê Hoàn was interested in developing the local economy and improving people's wealth. He had set himself to be an early example of a king participating in rice cultivating in Spring, right after Tết Holiday, an act that many later kings followed, to show that agricultural economy is very important to all Vietnamese. Also, perhaps in his understanding trade was equally important. He ordered to build several canals (Ba Hòa Canal to Thanh Hóa, Da Cái Canal to Nghệ An), with which not only farmers could later have a better irrigation system but merchants could conveniently develop their transport routes as well.
Under the reign of King Lý Công Uẩn (974–1028)—the founding father of Ly Dynasty, together with Tran and Second Lê, one of the most thriving and prosperous periods of the Vietnamese feudalist history—the capital city was relocated from Hoa Lu (Ninh Bình) to Đại La, and at the same time, Đại La was renamed to Thăng Long–meaning "dragon flying up". His concern of a new capital city was two-fold. On the one hand, Thăng Long was in a better position for self-defense purpose with many natural canals, rivers, mountains. The castle had already been well built. On the other hand, economic development would be much easier due to much larger population, skilled labor force, ready-to-use transport systems (by rivers, canals), and much more fertile agricultural lands. The economic reality proved his point positively.
His son, King Lý Thái Tông (1000–1054), added further encouraging policies for economic development such as tax reduction, while trying to remain budget balance and even budget surplus. He enthusiastically encouraged local production by advising people to use local-made handicraft products and even order imperial maids to weave silk and fabrics themselves, so that they would not later have to rely on imports from the Chinese merchants. The fourth king of Lý Nhân Tông (1066–1127)–was highly regarded as the most capable one in all kings of Lý was also the one that further concentrated on improving economic conditions for people to make their livings. He commanded the building of Cổ Xá dyke along the part of Red River flowing through Thăng Long (Hanoi) to protect the capital city from unexpected floods. Killing of buffalos and oxen–used by Viet people for rice field ploughing–was strictly prohibited. He also proactively sought to further develop the market system in Thăng Long, together with transport means for goods. As a consequence of his policies, artisans focused on manufacturing a variety of consumers’ goods such as dyestuff, fabrics, paper, copper, furniture, and so on.
Under Trần Dynasty (1225–1400), Thăng Long continued to be an economic and industrial hub, and reached a somewhat higher level of development, perhaps thanks to a reasonably long period of peace and the reputation of a commercial city. Foreign trade then provided more exciting opportunities for both local residents and foreign merchants–mostly Chinese and Ugurian (from Central Asia)–who opened shops for exchanging various consumer's goods. Agriculture also improved with increasing area of cropland gained, which had been reclaimed by military force and ordinary people, and more agricultural lands were better irrigated. The economic development policies adopted by early Trần's kings inherited the idea formulated by one of the most well-known senior general of Vietnam's history–Trần Thủ Độ–who had decided to bolster the economic development of the capital city by more economic reform so that savings and wealth could help contribute to a bolstered military force. The Trần Dynasty was best known for its three triumphant defeats of the formidable and mighty arm forces of the Mongols–in 1258, 1285 and 1288–which had swept through many Asian and European borders in the 18th century.After the first Tran Dynasty’s defeat of the Mongols, the world’s most mighty army in the 18th century led by Koubilai–a grandson to Genghis Khan, in 1258, a newly crowned king of Trần Dynasty, Trần Thánh Tông ordered homeless and poor Viet people to go reclaiming waste and virgin soil in various delta areas in the North, expanding the cropland for farmers.