Reforming a Socialist Developing Country--The Case of Vietnam

After over a decade of reform tinkering, Vietnam in early 1989 enacted a big bang that sought to combine stabilization with moving toward a market environment. In quick order, the pace of inflation was brought down to manageable levels. But the disarray resulting from stringent monetary policies not being supported by fiscal stances and control over foreign exchange led to considerable capacity underutilization and unemployment well beyond what would seem required to sustain the adjustment effort. The paper looks at the antecedents of the reform, its main components, the internal contradictions, and the dilemmas faced by the Government with a view to deriving lessons for other planned economies that may switch abruptly from a pervasive administrative planning environment to a model eventually to be anchored to market relations. Copyright 1990 by Kluwer Academic Publishers