Vietnam Economy | Do My Homework

Vietnam is a developing country that is located at the Middle East. It is said to have a population of around eighty five million people and comprising of fifty four different ethnicities and people of different nationalities. According to the U.N report 2009 the population had reached 83 million people. The main practiced religion is Buddhism. This country came as a result of merging the northern and the southern Vietnam which in former years was in constant fighting with each other. Even after the world war II French was still at the central of the wars in Vietnam and continued their rule until their defeat by the communist in 1945.Vietnam became a unified country in the year 1975 after it had been ravaged in wars for several years. The Vietnam War was one of the wars that Vietnam was in and it happened in the late 1950s and involved a couple of more countries like Cambodia. Before that was the first Indochina war fought between the North and the southern Vietnam. The north was supported by their communist allies while the south had its support from the U.S and other anti-communist nations. The country is now under the rule of a communist state type of government with administration of the country is done through the 58 provinces and cities with its main capital been at Hanoi and the largest city is the Ho Chi Minh City. The climate of the country is characterized by tropics and monsoon winds and the topography of the land is mostly hills and mountains. Vietnam is a Socialist Republic which is a single-state party. The president is the head of state and is also the commander in chief of the country’s military forces. For many years the Vietnam economy has mainly relied on agriculture and mining with the main industries being those of food processing, chemical fertilizer, oil and coal among others.

This is a country that is recovering from a lost economy that occurred during its war years. During this era that run all through the 60s, the economy of the country was divided in three; this included those involved in growing rice, those who were located in the south did mining and rubber plantations and the third layer included the an economy that was driven by most largely the soviet and the Chinese aid and this was practiced on the northern part of the nation.  In the 70s the country adopted the model of economy that was been used by the north. This reform came with a great resistance from farmers and also those in the urban areas where most of the people were self-independent. This move also did not go down ell with the southerners who had a bad relationship with the Chinese. All these factors combined with poor management of government programs massive expenditures by the military led the country into a serious crisis of the economy. In the mid 80s the country’s GDP was at a record low having estimated to be US$130 per annum thus making Vietnam one of the poorest countries but the country has shown commitment in trying to make their improvements through trade with other nations through imports and exports. Also in the year 2007 Vietnam joined the World Trade Organization. This step has helped the country establish a good foundation on the international market as well as strengthen their economy through domestic trade. With this new diverse market the country that mainly relied on agriculture for their export has seen this sector declining its share in the economy. From the time Vietnam joined the World Trade Organization it has put in place structural reforms that will drive the country into a competitive economic strength through its export industries. This has also led to the rise in percentage of export to the United States which is the country’s main trading partner by almost 900 from the year 2001 to the year 2007.

Among the reforms that were done, one of the most effective was the Doi Moi policy reforms that took place in the late1980s.This policy was focused on changing the central planning  and replacing it with a regulated market economy. This saw the legalization of almost all forms of private economic activities and the abolishing of price controls most of the goods and services. These changes in price control were first implemented in the agriculture sector and this allowed the farmers to retail their surplus products to the private market at the highest price that they can bear. Another reform was the division of agriculture cooperatives and leasing of that land to locals who in turn would pay taxes in order to gain the right to use the land and after this all the produce from those plots of land would be the property of the home owners. This led to an increase in agriculture production and also created self-employment in the farms. The effectiveness of these reforms was felt in 1992 when in just a few years Vietnam had become the third largest exporter of rice globally. The country also encouraged the investments in the industries by foreigners while the state controlled some few considered industries.  With the reduced government expenditure and a renewed revenue collection system these reforms changes in the country assured them of macroeconomic stability. After the introduction of these new reforms, the country was now at a better position to bring in foreign investors which improved the businesses leading to the Vietnam economy been one of the fastest in the world. Between the years 1990 to 1997 the gross domestic product was at an average growth of 8% annually and 6.5% from 1998 to 2003.The years between 2003 and 2007 saw another massive growth of 8% GDP annually but again it slowed a bit in 2008 and 2009 where it dropped to 6.2% and 5.3% respectively. By last year the gross domestic product had recovered to 6.52% through the third quarter. This growth also showed an improvement on the foreign trade and direct investment since the year 1988 until 2009 when it was disturbed by the global economic crisis. Between the years 1990 to 2005 Vietnam had the best years in agriculture as their production rate almost doubled making the country the second largest exporter of rice in the globe.

One of the greatest resources the country has is the energetic population. By the year 2009 the country’s labor force was estimated to be 47.49 million people. The agriculture sector had employed 51% of the labor force and the industrial 15.4% by the year 2009. Apart from these Vietnam as a country also has a lot of resources that contribute to the rapid growth of its economy.

Agriculture which is the crucial and biggest sector of this economy has the largest number of people earning from practicing farming.  Agriculture also contributes a lot to the country’s exports and is the major source of raw materials that are used in the processing industries. Rice is the most popular grown cash crop and others include tobacco and jute while other popular food crops include corn, sweet potatoes, peanuts and cassava and also vegetables and fruit trees are grown all over the country. In the year 2009 Vietnam as ranked number 17 among the supplies of food and agricultural product to America showing its dedication to agricultural exports in the global market. On its northern part it has various mineral deposits. These include phosphates, god, iron ore, tungsten among others with also reserves of anthracite coal. There has been a discovery of oil deposits on the offshore of the country’s southern coast. Seafood is a growing resource that has opened foreign market with shrimps, crabs and lobsters been the main products. The forest is another resource. With the increase demand of furniture, plywood, paper and charcoal this industry is also a contributing party to the economy although the deforestation is starting to have a negative effect on the environment.

Another big resource in Vietnam is the industrial sector which after the unification of the country there was a transformation of private industries into joint ventures run by the state and the private owners. Mining is most important with many minerals being produced for export while others like iron, tin and chromium are produced for domestic industry and others like Gold are used to make jewelry. The largest industry in the country is that of Food Processing. The industry involves processing of sea food for export, coffee and tea for both domestic and international markets and also beverages. For a long time Vietnam has been producing cement and the production of fertilizer in the chemical industry has grown. Generation of electric power has improved with hydroelectricity been the main contributor.

In the energy sector petroleum is the largest source of commercial energy with oil reserves going up to 500 million tons. The production of oil by the year 2009 had reached 302,000 barrels per day making it the world’s 42nd country in oil production and its oil exports were 29.400 barrels per day. Coal is the other source of energy that is used domestically in Vietnam.

The trading sector of Vietnam started at a low performance after the reunification with exports been very minimal compared to the imports. During this period the country traded with the communist nations in Europe and the Soviet Union who later broke their ties because of reduced trading. This gave way to other countries like Singapore and Japan to become partners and this increased exports. After the country cut from the soviet block, it lowered the value of its currency so as to increase exports and embrace the regional and international integration of the global economies. This Vietnam has demonstrated through been committed to its reform program and also in the signing of many trade agreements which include the U.S-Vietnam Bilateral Trade Agreement, the Association of Southeast Asian Nations and the Free Trade Area and it officially became an associate member of the Trans-Pacific Partnership on February 2009.This resulted to exports contributing around 62% of the GDP in 2009 and even raised to 72% by the third quarter of 2010.With these new reforms there was growth in exports up to about 62% of the GDP in 2009.

The economic development in Vietnam dealt a big blow in the year 2007 and the early 2008 when it experienced high inflation rates leading to the lose of value of the country’s currency. This caused the prices of basic commodities such as food to rise by more than 50% which led the government to focus on growth as the global financial crisis had caught up with them. The response to this economic pressure was in lowering corporate tax rates and lower interest rates. With these measures Vietnam managed to avoid the harsher effects that affected the bigger economies and they still managed a GDP growth of 5.3% in 2009 and approximately 6.8% I n the following year.

When the bilateral agreement was made in 2001 by both the United States of America and Vietnam they has been an increase in trade between the two and also the investments by the U.S in the country have been large. In the year 2009 America exported $3.1 billion worth of goods to the country and imported $12.3 billion worth of goods from Vietnam. The Vietnam economy has also benefited a lot from direct investment from the U.S companies. The American private sector in 2009 injected $9.8 billion as foreign direct investment to the countries economy. The two countries have extended the bilateral agreement by signing an Air Transport Agreement in the year 2003 that allowed the U.S Airlines to share a third party code with the partner Airlines and opened direct flights from the capital of Vietnam to San Francisco. The agreement was later amended to open for cargo air transportation between the two partners .Another agreement that was signed was the Bilateral Maritime Agreement that allowed sea transport of goods and services from the Vietnam industries to American firms.

At the present the country is undergoing a transition in its leadership with the ruling communist party trying to streamline its leadership for the purpose of economic, diplomatic and social policies. As many analysts have seen it, the country is focused on improving relations with the United States. Those in the congress are believed to continue to focus on the strategy of high GDP growth and offer support to state owned industries that need restructuring so as they can be able to compete in the socialist economy and this will help in making Vietnam a modernized industrious nation in the next ten years.

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