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The Social Impact of the Reform Process


  • Adam McCarty

    (Institute of Social Studies, The Hague)


The economic performance of Vietnam in the 1990s would be classified as a “miracle” if such achievements were not so common in Asia in the latter half of the twentieth century. GDP growth rates between 8.1 percent to 9.5 percent during 1992-97 were led by industry and services, though the agriculture sector growth also increased by an impressive 4.8 percent per annum. Transition, typically identified as “starting” in 1986, was a relatively painless affair of structural adjustment and stabilisation for the first decade. The state sector was never large in Vietnam, where 80 percent of the population lives in rural areas, mostly growing rice. By 1986 the planned part of the economy was thoroughly undermined, and inflation had eroded any monetary overhang. The collapse of the Council of Mutual Economic Assistance (CMEA) trading relationship forced restructuring in the modest state-owned enterprise sector, which shed almost one-quarter of its workforce. However, institutional reforms created a boom in the urban household economy that soaked up the unemployed. The shift in employment was relatively easy without the burden of a large military-industrial complex, and Vietnam’s exports to CMEA found new Western buyers with ease. Therefore, Vietnam did not experience a transitional crisis in trade or even in the rate of GDP growth. This success was largely because the planning system declined to a residual by 1988. The failure to rigorously implement the central planning model in the ten years after 1976 became a virtue for transition. The social consequences of transition were due to fundamental changes in incentive structures and regulations. This paper examines these consequences in several areas: food, poverty, land, employment, social protection systems, health and education.

Suggested Citation

  • Adam McCarty, 2001. "The Social Impact of the Reform Process," Development and Comp Systems 0110004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0110004
    Note: Type of Document - ; pages: 27; figures: included. Published in "Globalisation and Third World Socialism: Cuba and Vietnam" (Claes Brundenius and John Weeks eds.), 2001, Palgrave, UK.

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    References listed on IDEAS

    1. Dollar David, 1994. "Macroeconomic Management and the Transition to the Market in Vietnam," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 357-375, June.
    2. Francisco H. G. Ferreira, 1999. "Economic transition and the distributions of income and wealth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 377-410, July.
    3. Mallon, R. & Irvin, G.W., 1997. "Is the Vietnamese miracle in trouble?," ISS Working Papers - General Series 18994, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    4. Horne, Jocelyn, 1995. "The Economics of Transition and the Transition of Economics," The Economic Record, The Economic Society of Australia, vol. 71(215), pages 379-392, December.
    5. David O’Connor, 1996. "Labour Market Aspects of State Enterprise Reform in Viet Nam," OECD Development Centre Working Papers 117, OECD Publishing.
    6. Krishna Srinivasan & Erich Spitäller & M. Braulke & Christian B. Mulder & Hisanobu Shishido & Kenneth M. Miranda & John R Dodsworth & Keon Lee, 1996. "Vietnam; Transition to a Market Economy," IMF Occasional Papers 135, International Monetary Fund.
    7. Prescott, N., 1997. "Poverty, Social Services, and Safety Nets in Vietnam," World Bank - Discussion Papers 376, World Bank.
    8. Milanovic, Branko, 1998. "Explaining the increase in inequality during the transition," Policy Research Working Paper Series 1935, The World Bank.
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    More about this item


    reform; transition; Vietnam;

    JEL classification:

    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform

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