Vietnam is currently at a crossroads, a statement that holds true across politics, the economy, and broader society. Politically, the Vietnamese Communist Party is undergoing an unprecedented self-purification campaign, with multiple high-ranking cadres being removed for corruption. Economically, Vietnam is at a juncture where the key factors that previously contributed to its successful growth strategy, such as a cheap and abundant labor force, are losing their impact. Meanwhile, changing economic landscapes, both global and domestic, present opportunities for sustained growth, but only if fundamental reforms in policymaking and governance are implemented. This edited volume by Borje Ljunggren and Dwight H. Perkins is a timely contribution that will serve as an excellent handbook for practitioners and policymakers seeking to understand Vietnam’s contemporary political economy.
As stated in the introduction, this collection sets out to provide a comprehensive view of how Vietnam arrived at its current state and offers predictions on where it is heading. The editors have assembled an impressive team of prominent experts from various fields who have put together a compelling picture of Vietnam’s evolution. The volume is divided into four parts, focusing on politics, the economy and environment, human welfare, and global contexts. Part 1 delves into the political structure and resilience of Vietnam’s communist party-state, highlighting the continuity of centralized control and the adaptation of foreign ideas to maintain power. Part 2 focuses on economic transformation and presents an overarching view of Vietnam’s institutional reforms, growth performance, and financial markets. Part 3 provides snapshots of important social issues, such as poverty reduction and inequality, education, family life, and public health challenges. Overall, these chapters highlight the significant progress made in these areas while pointing out the ongoing need for targeted policies to ensure equitable access to resources and services. Finally, part 4 provides an in-depth look at Vietnam’s foreign policy, exploring the complex dynamics of Vietnam’s relationships with China and the United States, detailing historical animosities, geopolitical strategies, and efforts toward reconciliation and cooperation.
The book’s most significant contribution is the shared message brought forth by the chapters on the Vietnamese economy. Although they examine different economic sectors from a variety of approaches, the authors highlight a common theme: the urgent need to remove constraints on the domestic private sector to sustain Vietnam’s future growth. In chapter 5, Le Dang Doanh traces the evolution of Vietnamese businesses to show that, while the state sector’s share of GDP since Đổi Mới [Renovation] has declined, the slack has been taken up by foreign direct investment (FDI) rather than domestic businesses. The private sector’s contribution remains small, with most of it coming from household businesses instead of legally registered companies. Political bias favoring state owned enterprises (SOEs) and government interventions in the economy continue to hinder the development of a strong private sector. In chapter 6, Vu Thanh Tu Anh and Dwight Perkins use a different approach to arrive at the same conclusion. The authors crucially point out that Vietnam cannot sustain a high growth rate simply by raising the rate of investment as it has done in the past; higher productivity growth (i.e., the private sector) is imperative to maintain previous GDP growth rates. To this end, they recommend policies to reduce the central role of the inefficient SOEs in the economy and major reforms in the financial sector and other market-supporting institutions to level the playing field and support the growth of domestic private businesses.
Furthermore, stronger domestic firms would magnify the developmental impact of the already crucial FDI sector, an argument advanced by Ari Kokko, Curt Nestor, and Le Hai Van. In chapter 8, these authors examine why FDI into Vietnam has not led to the desired spillovers of technological and management know-how into the broader economy. They cite the weak capacity of Vietnamese small- and medium-sized enterprises (SMEs) in support industries that supply to foreign invested enterprises (FIEs). To maximize these spillovers from the FDI sector, the authors advocate policies to strengthen the capacity of small- and medium-sized domestic businesses and augment their influence in shaping government policies—a privilege hitherto reserved for the domestic oligarchs, as illustrated by Nguyen Xuan Thanh in chapter 7.
In addition to offering clear policy recommendations, the edited volume makes a significant contribution by highlighting the challenges of implementing them. While maintaining a dominant presence of SOEs may appear economically irrational, chapters 5 and 6 argue that this policy is more comprehensible when viewed through its political implications. Although not directly focused on the economy, Alexander Vuving’s contribution in chapter 15 provides a crucial geopolitical perspective, explaining how Vietnam’s foreign policy evolution—shaped by shifting influence among modernizers, ideologues, and rent-seekers—is a nonlinear process. Retaining a strong state sector, even if reduced and inefficient, serves to address the interests of the latter two groups. Since multiple chapters in this volume highlight the continuing dominance of SOEs as a significant hindrance to future growth, it seems a missed opportunity not to include a dedicated chapter on this important group of actors.
A note on methodology: Although the economic chapters examine a variety of sources, including historical documentation, case studies, and macroeconomic data analysis, they overlook one important body of information—the perspectives of the domestic businesses for whom the book is advocating. Some of the book’s claims, such as the uneven competitive environment among small firms, large SOEs, and foreign enterprises or the ongoing struggles with bureaucracy, unpredictable regulations, and corruption, could be strengthened with a comprehensive analysis of micro-level firm data on businesses’ evolving experiences in Vietnam’s economic environment. This data is readily available in the annual Provincial Competitiveness Index (PCI). Similarly, the chapters on human welfare, poverty, health, and education could benefit from a dedicated chapter analyzing data from the Provincial Governance and Public Administration Performance Index (PAPI), which surveys citizens across the country about their access to critical public services, such as education and healthcare.
Overall, this edited volume by Ljunggren and Perkins offers a compelling and multifaceted exploration of Vietnam’s political economy at a pivotal moment in its development. While there are areas that would benefit from further investigation, the volume remains an indispensable contribution to the study of Vietnam’s past achievements and future prospects.
University of California Press