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VIETNAM fighting poverty with market economy
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Vietnam has experienced remarkable economic development by implementing market reforms, embracing globalization, and fostering a positive attitude towards wealth and entrepreneurship. The country's success is driven by free trade agreements, reduced poverty rates, increased international integration, ongoing privatization efforts, significant roles of state-owned enterprises, and the crucial participation of women in the economy. The focus on wealth creation, entrepreneurship, and a favorable view of capitalism has been instrumental in Vietnam's economic growth.
Transcription generated by Skrybot
Vietnam, until recently the poorest country on the planet, today the 33rd largest economy in the world, a country that Europe and America associate mainly with war movies, has won its most important battle in the field of economics. Population of 100 million, complete opening of the market to globalization, the presence of global brands, and ease of running a small business, and all this in a country that is that has socialism in its name. Vietnam has been a development success story, according to a report from the World Bank. Vietnam is now one of the most dynamic emerging countries in the world and offers countless opportunities to hardworking people and entrepreneurs. GDP per capita increased six-fold since the launch of the Doi Moe reform in 1986. Dr.
Rainer Seitelmann, German historian and sociologist, has been visiting and studying Vietnam's economy for the last decade. In his 2023 book, How Nations Escape Poverty, he's focusing Vietnam as a role model for development and growing rich. No country of comparable size has gained as many points in the index of economic freedom since 1995 as Vietnam over three decades. The number of people living in poverty fell from 80 to 3%. The socialist republic of Vietnam is changing so rapidly that by the time you watch our short film, the country will even be richer. Vietnam won the war but lost the peace. Now, Vietnam also won peace.
But is it socialism that is responsible for the fastest pace of development in the world? To what extent have the ideas of social justice, combating inequality, and the envy of the richest people put back on its feet a country that was the poorest in the world in 1990? To answer this question, we have to go back another decade, to the beginning of the 80s. What was Vietnam like in 1980? First of all, extremely poor. Five years have passed since the end of what the Vietnamese call the American War. The communists are in power, proud of having driven the world's largest army to the ground. The authorities are trying to rebuild a country from the ruins.
A country that has been hit by up to 15 million tons of bombs, 10 times as many as had been dropped on Germany in the Second World War, destroying economic centers, causing millions of casualties. leaving behind millions more orphans, war invalids, and hundreds of thousands of wounded. Wars are brutal. Vietnam suffered a lot during the war. And the aftermath of the war is what we can call a silent war. A war amid peace. A struggle to rebuild. No less difficult than the war itself. The central committee of the party starts to build a new society and uses the same methods as other socialist countries, starting with nationalization of the means of production. My family had a car before 1975, but after that, we left everything and we used bicycles.
In Ho Chi Minh City alone, 30,000 companies are nationalized. At first, there is no resistance. as they were mostly Chinese companies. However, a precedent was set. The land that the communists had just given to the peasants is now naturalized and turned into collectives. In the north of the country, 97% of farmers work in collectives. In the south, it's less than 25% because the peasants resisted, in spite of the fact that most people in Vietnam worked on farms. There was never enough food to feed the people. Farming was our livelihood. We didn't eat a lot back then. Everything was valuable, and growing rice was very difficult. So everything was exchanged for rice. Vietnam needs 16 million tons of rice for its own use.
It produces only 14, and this amount is constantly decreasing. from only 240 kilograms of rice per person per year in 1976, this amount has fallen to 190 kilograms in two years. For you, it's hunger, but for us, sometimes we're young and we feel it's not. If compared, if compared, something is hunger. But for us, we accept it. We grew food for ourselves and our animals, selling any extra rice to get by for our kids' education. We had all sorts of problems. In a lot of countries, such as Germany and Japan, even though they lost the Second World War, there was a massive post-war economic boom. But not in Vietnam, even though it was victorious in its 20th century war.
In the event of a crop failure, the country faces another wave of famine and needs to appeal for food aid, which Vietnam received at that time from the Soviet Union and socialist countries of Eastern Europe. Such foreign aid injections could constitute as much as one-third of the annual budget. The planned 14% annual economic growth was, in reality, close to zero. 1990 was very tough. This was a very tough life. My father had to find a way to find food for us. Many of my friends in the generation born in, like me, 66, they're small. I mean, this is probably one of the most important examples. People being small because they have no food. Each month, our family of five received 300 grams of meat.
My salary was only three dollars a month. It wasn't enough. We had to find different ways to make money so that we could buy more rice. At the beginning of the 80s, some things began to change. Farmers left the collectives in some villages. This was forbidden, but they had no alternative if they wanted to survive. And it became clear, where farmers owned land privately, they did much better than in the collectives. The party also recognized this and started with small reforms. Sometimes they simply allowed the spontaneous actions of the farmers. The market economy developed not from the top down, but from the bottom up. Despite these small positive steps, the situation in Vietnam got worse. In the mid-80s, inflation reached 582%.
The government changed the currency, and people lost their savings. What people earned in a month was not enough to live on for a week. We also tried raising pigs and had to pay taxes for military defense. There were people who had nothing to eat. Even then, we would be happy to be able to buy 5 to 7 kilograms of rice, enough for about 10 days. During the Sixth Party Congress, it became clear that the Party understood that far more radical reforms were needed. to improve the situation. The Sixth Congress of the Communist Party marked an important milestone. People had come to the fore in the party who honestly described the situation in the country and understood that not small but fundamental reforms are needed.
The party openly admitted, our production is not enough to cover our needs. Productivity is constantly falling. natural resources are being wasted at the expense of the environment, we have multi-million unemployment and an unmet demand for culture. The prevailing belief was that the current methods will not help build the country's prosperity. Vietnam wasn't the only socialist country to start economic reforms at this time. In the 80s, Deng Xiaoping introduced private property and launched economic reforms in China. And in the Soviet Union, Gorbachev announced his perestroika reforms to give people more freedom. But it wasn't as much about copying the elements of the perestroika program. It was about the very fact that it was possible to move away from the old model, the incompetence of which was already apparent to everyone.
There's an old tradition in Vietnam. Many people believe that releasing a sparrow from a cage in one of the pagodas can bring you prosperity. 1986 was the year when the Doi Moi reform started in Vietnam. It was like setting the first sparrow free, the sparrow of market forces. And indeed, it brought a lot of prosperity. The Doi Moi is the principal reform. But from Doi Moi until now, many times reform, many times re-structure, many times change, many things change. The so-called Doi Moi reforms didn't mean turning Vietnam into a capitalist country overnight, but implementing private property and free market reforms meant that the role of the government in the economy was reduced. Honestly, coming from a post-war Vietnam, burdened by restraints, people were very careful with their spending.
They valued hard-earned money. After the work, he has a job to do. He can have an income to give back to my parents. Before that, my parents didn't have any income from us. A state-owned company producing pencils or clothes now had to compete with anyone who established a similar business privately. The fate of these companies was no longer decided by the government but by the customer. Since private companies were now permitted, I considered opening a private gallery. When I registered the gallery, they said I wasn't wasting any time. I replied, indeed, it's been only a week since the legalization, but I've been waiting more than 10 years for this. Decentralization has taken place. Wherever possible, decision-making has shifted to the regional headquarters.
In the economy, The government was no longer the all-powerful dictator. First, we want to try to have to eat enough, not be hungry. That means to fulfill our stomach. We have to be aware we have enough clothes to not be too cold. After the collectives disintegrated, farming families voluntarily united in production groups. Now farmers decided what to produce, how to produce it, at what prices to sell, and how to dispose of profits. Agricultural production shot up. After the 1990s, restrictions were lifted to help producers and craftspeople. With the opening of the economy, everything became easier. 10 to 20 years later, we started using machines. In the end of the 80s, Vietnam starts to liberalize prices and reduce subsidies for inefficient state-owned enterprises.
It is now also possible for foreign companies to invest in Vietnam, and the government guarantees that these companies will not be nationalized. The government also worries. The enemy comes to do something, it cannot protect the country. If you open like this, but the prime minister say, we have to open. In 1989, the state is only concerned with setting prices for electricity, gasoline, cement, steel and transportation. Until recently, it had set prices for all products. The prices of food produced on the no longer regulated market are falling. such as rice by 30%. At that point of time, you don't have enough supply for the demand. So when you sell, things get sold out really fast. State-owned companies lose their importance.
By the end of the decade, there are 800,000 fewer people working in them. Many employees move to private companies or start their own. The key decade for Vietnam is coming to an end. At the same time, these are crucial days for the entire Cold War order. The Soviet Union is falling apart and will no longer provide Vietnam with emergency loans. The post-war order of people's democracies in Eastern Europe is falling apart. After more than half a century of socialist experiments, there is no socialist country in the world that has achieved success. and guaranteed prosperity for its citizens. Socialism is failing before the eyes of the whole world. The party understood that Vietnam could only overcome poverty with free market reforms, but decided that the one-party system should remain in place.
Developments in some Eastern European countries were a warning to the party. Will Barron Vietnam suffered from the consequences of wars with France, the United States, China, and Japan. What had not been destroyed by the wars was destroyed by the socialist planned economy. Martin Lippert In the early 90s, Vietnam was still the poorest country in the world with a GDP per capita of $98. According to a World Bank study, Almost 80% of the population lived in poverty. It started only to develop upon the lifting of the trade embargo in 1993 and then the signing of the bilateral trade agreement with the Americans and ratification in 2001. That way the Vietnamese learned that opening market, international integration and free trade agreements are basically the way to make the Vietnamese people richer.
Market reforms are starting to have an impact that is being seen abroad. More and more foreign companies are looking to invest and set up headquarters in Vietnam. In 1998, the government said we cannot do like that. We have to open. Our businessmen, our people can go out to see the robot, something like that, and people can go in. Since 1990, economic growth has been 7. 9% per year. And in the mid-1990s, Vietnam was the fastest-growing country in the world after China. Everything grows, and so does the country. It's all thanks to the open economy. It's important to understand that the people of Vietnam didn't blame America for their situation.
When asked in Nepal which economic system they admire, young Vietnamese people named countries like Japan and the United States first, and countries like China and North Korea last. This may come as a surprise, but this is one of the secrets of their success. They do not look backwards and do not blame others for their problems. They look forward and see themselves as masters of their own destinies. Many Americans have the perception, if they come first time to Vietnam, that the Vietnamese will put that in front of them. But nobody's doing that anymore. In 1998, I go to U. S. to study. One university in America invite us to understand what means marketize, what means free economy.
My exhibition in America left me with a fondness for the people of the United States. My story clearly shows how amazing and kind-hearted Americans are. The Vietnamese want to move on. They want to integrate. And they want to get as close as possible economically, commercially also to the United States of America. We are friends. We are at peace. Because we know that what we pay for the war is terrible. Governments press on with reducing bureaucracy and supporting local businesses. One measure allows small entrepreneurs who have so far operated in the grey zone of the economy to register their businesses. This led to the creation of 160,000 new companies between 2000 and 2005 alone. I am passionate about lighting. In 1997, I started an officially established company.
Because of this, I ran out of time. government support a private Vietnamese private company. I used to only sell incense locally. With the opening of the borders, we could import and export, and that brought many opportunities for growth. So opportunities come, but you need to know to grab them. And for almost 10 years, from 1991 to 2000, Most of my paintings sold in foreign countries. Vietnam is still dominated by small businesses, and women play a very important role in economic life in Vietnam. You will find a lot of female entrepreneurs, and 30% of CEOs are women. Actually, Vietnamese women are very strong. Our manager, we have 40% is female. During the war, women had to take over for men in factories.
And interestingly, we did better than men. In 2006, half of the population still lives in poverty, but this percentage is consistently falling. More and more people belong to the middle and upper classes. And this leads to the phenomenon that is widely reported in the Western media, inequality. Egalitarian ideas are not very popular in Vietnam. People in Vietnam accept inequality because they had their own negative experiences. with living in a society that proclaimed everyone to be equal. The escape from poverty occurred virtually in a single generation and equally among all groups of society. Between 2001 and 2010, trade between Vietnam and the United States reaches $20 billion per year, an increase of 1,200%. The experience of Vietnam shows that free trade and globalization are not bad for poor countries.
The opposite is true. They are the precondition for poor countries to escape poverty. Vietnam opens its economy and becomes a member of prestigious international institutions, including the WTO, the World Bank, the IMF, and the AFTA. Vietnam has signed now 17 free trade agreements and has the highest level of international integration and the market access and market liberalization if you compare all the free trade agreements of other nations Vietnam is on top. Vietnam is number. But the mindset of the people that we learn from overseas means things happen so fast because we are so hungry for knowledge. After the end of central planning, the only remaining elements of the earlier definition of socialism in Vietnam was the government's determination to maintain state enterprises.
Many directors of those state-run enterprises are afraid of losing political control, and workers are often afraid of losing jobs. Privatization has progressed, but there is still a lot to be done in this regard. The state does not call this process privatization. In Vietnam, they use the term equitation. In many cases, the state remains a large shareholder and part of the company is listed on the stock exchange. State-owned companies generate as much as 20% of GDP, but it must not be forgotten that they operate on highly preferential terms. They can count on a better credit model or access to classified information. They are also not at risk of bankruptcy. Vietnam today is one of the most globalized countries in the world.
And one result is that the percentage of people living in poverty decreased to 3%. Another agreement is signed, this time with the European Union. It eliminates 65% of tariffs on products from Europe, with the rest gradually being eliminated by 2030. They want to create wealth for their own people. And this is the result. We have to improve, otherwise the market and the situation cannot stop at waiting for you. The fact that Vietnam has a one-party system and a state-run press made the reforms easier. Because unlike in the Eastern European countries, for example, there were no other parties or media to oppose the free market. One important reason for Vietnam's economic boom and success is that wealth and the wealthy are viewed positively. The rich are role models and not scapegoats.
The goal of becoming rich is very important in Vietnam today. 76% of people in Vietnam say that it's important for them to become rich. This puts Vietnam on first place in our survey that we conducted. in 13 countries. Majority, they respect the rich people. First, rich people give job to them. To become rich people is not easy. So, the majority they respect them. Okay, in Vietnam, rich people are adored. Rich people are an example. When we asked about the personality traits of rich people, respondents in most countries selected negative traits. such as greedy or ruthless. We see something very different in Vietnam, where 74% say rich people are visionary and power-sighted. 69% intelligence, 67% bold and daring, 63% industrious, and 62% imaginative.
A survey conducted in 2022 showed us what kind of image of capitalism is most commonly shared among Vietnamese people. In a poll in 35 countries, we asked people what they think about capitalism. In Vietnam. . . Associations were very positive. 80% associate capitalism with progress. Also 80% associate capitalism with innovation. 77% with access to a wide range of goods. These were followed by freedom and prosperity. Then we presented respondents with 18 statements about capitalism. And in first place, People in Vietnam selected capitalism means economic freedom. Negative statements, as for example, capitalism entices people to buy products they don't need, or capitalism leads to war, were at the bottom of the table.
While in many countries the opinion about the free market system changed for the worse when the word capitalism was used, in Vietnam, using it has a positive effect. It's very much focused on expansion, very much focused on entrepreneurship, but it's also focused on human positiveness, friendliness, acceptance and tolerance. We began our story in the 80s when Vietnam was the poorest country in the world. And we end with Vietnam as a prosperous economy with a great entrepreneurial spirit. We can learn from the story of Vietnam that the only way to reduce poverty is free market reforms and the introduction of private property. And just as important, don't blame others for your problems. Take responsibility for your successes, but also for your defeats.
Unlike African countries which blame colonialism for their problems, people in Vietnam blame neither the French nor the Americans, the Chinese or the Japanese for their problems. Country is like an individual. If you blame someone, give them power. Don't do it. Be more like Vietnam. Take responsibility for your own destiny. The thing grudges doesn't improve anybody's life. So forgive and forget. and then learn how to improve everyone's lives, improve their economies, better than just keep on thinking about the past, because you're not going to change the past in any way. The suffering, hard work, facing death, I was still able to make it. I still stood proud. People ask me, do you have some time difficulty? I say yes, of course, but we don't see that as difficult.
We see that as a challenge. No challenge, no fun. Vietnam has a chance to become one of the leading countries in the world if it focuses even more consistently on a market economy. To do that, further privatizations and liberalizations are needed. And it would be important to add intellectual freedom to economic freedom, so that newspapers and television stations can also belong to private individuals, and not only to the state, and that you can publish your opinion in books and articles without any censorship. There are currently no signs that things will develop in this direction, but I hope for Vietnam that freedom will be realized in all areas of life.
The Vietnamese people have achieved already so much that seemed unthinkable decades ago that we want to be optimistic for the future of this wonderful country. And you know what? When you really put your heart into something, trying every possible way to achieve it, you tend to have more successes than failures. Still, it looks like that at least Vietnam has a few more sparrows to be freed. .
S K R Y B O T
Skrybot. 2023, Video transcriptions from YouTube
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