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Monday, 24 August 2009

What can Vietnam teach Zambia?

Vietnam’s development performance since the early 1990s has been one of the strongest in the world, following the introduction of its doi moi (‘renovation’) economic reform programme in 1986. A recent paper draws eight key lessons from Vietnam's development strategy for developing nations such as ours :

  1. Manufactures exports can be developed very rapidly by a country if global buyers make it a country of major sourcing and persuade their key vendors to locate there. Buyers and inward investors are strongly influenced both by export market access and by the domestic investment climate. Perceptions of the investment climate depend more on political and policy stability than on the details of bureaucratic procedures.
  2. Export development does not depend on import liberalization. Anti-export bias is an overrated concept, although it may have deterred some smaller firms in the private sector from exporting.
  3. Location in the rapidly growing Asian region is still a significant advantage, offering both adjacent markets and inward investment.
  4. Successful reform of agriculture, particularly land reform, is still a key to development. It can be the basis not only for raising incomes and domestic demand, and reducing poverty, in countries with a predominantly rural population, but also a basis for expanding exports. Vietnam succeeded in maintaining agricultural output growth beyond the initial once-and-for-all spurt caused by land reform by investing in raising productivity, with state organizations taking an active role.
  5. State-owned enterprises can be reformed and made to raise their productivity. This depends both on incentives and on their external environment. Improvements in SOE productivity have not depended on competition from the domestic private sector, at least as yet. Privatization has little to offer if done prematurely.
  6. Educational development is important. Near-universal literacy, and selected technical and higher education, helps attract foreign investors and facilitates industrial and technological development
  7. The ‘East Asian model’ still has much to teach us. An active role for the state, for example in the development of rice production, combined with a willingness to use market mechanisms, remains a powerful combination. Although ‘blue-prints’ for economic reform require adaptation to national circumstances, Vietnam’s reforms have been similar to China’s.
  8. Aid donors can be ‘managed’.They like being associated with success and in Vietnam they admit they cannot ‘buy’ policies. Vietnam has been able to retain strong national ownership of its development strategy.
No surprises here for regular ZE readers, especially those who have also picked up Bad Samaritans. Readers may also wish to note other "success stories" we have previously discussed including Mauritius and Botswana.

1 comment:

  1. Just in case anyone thought that the arguments sound very familiar - only they're not talking about Zambia, but about Mexico.

    Free trade and Mexico's drug war


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