… Searc

Economy of the Republic of

Vietnam

… … …

Economic activity of South Vietnam, 1972

The Republic of Vietnam (South Vietnam) had

an open market economy mostly based on
services, agriculture, and aid from the United
States. Though formally a free market
economy, economic development was based
largely on five-year economic plans or four-
year economic plans. Its economy stayed
stable in the 10 first years, then it faced
difficulties due to the escalation of the Vietnam
War, which led to unsteady economic growth,
high state budget deficits, high inflation, and
trade deficits. The South Vietnamese
government conducted land reforms twice.
The United States played an important role in
this economy through economic and technical
aid, and trade.

Structure

Growth stages …

GDP of the North and South Vietnam (unit:

billion USD, 2015 price).[11]

Year 1956 1958 1960 1963 1965 19

South
11.283 12.714 15.274 16.422 13.515 -
Vietnam

North
2.587 - 4.113 4.702 6.000 6.4
Vietnam

GDP per capita of the North and South

Vietnam (unit: USD)[12]

Year 1956 1958 1960 1962 1964 1966

South
62 88 105 100 118 100
Vietnam

North
40 50 51 68 59 60
Vietnam

Before 1965
…
Pre-1965 period saw a rather rapid GDP
growth rate of the South Vietnam's economy,
accompanied by a reasonable CPI rise. The
state budget of the Republic of Vietnam
enjoyed a surplus in the early stage but soon
turned into deficit from 1961. Investment
remained strong, industry and agriculture
generally retained a high growth rate. In 1955,
the government of Ngô Đình Diệm founded the
National Bank, Foreign Exchange Bureau,
issued new currency replacing French
Indochinese piastre and defined the exchange
rate of dong against USD at 35:1. Land reform
was conducted and lasted until 1960. Unused
lands were seized and redistributed to the
farmers. Land ownership was limited to 1
square kilometre per person, the left area of
this ownership limit was to sell to the
government, and the government in turn would
resell to the needed peasants. Peasants and
land owners had to sign land use contract,
according to which land rent was a mandatory
article. The series of land forms led to the
ownership of two-thirds land in the South
Vietnam to the wealthy land owners.[13]
Therefore, the government of Nguyễn Văn
Thiệu reimplemented land reform to change
this situation. In 1956, the Republic of Vietnam
passed a constitution in which the
establishment and role of the National
Economic Council was specified. This council
was chaired by the Vice President of the
Republic of Vietnam. In the same year, this
country joined the International Monetary Fund
(IMF).[14] In March 1957, Ngô Đình Diệm
proclaimed Declaration of the President of the
1st Republic (Tuyên ngôn của Tổng thống Đệ
nhất Cộng hòa), calling upon foreign and
domestic private investment and committing
the governmental protection of the investors’
benefits as well as investment encourange
policies (preferable tax rates, land rent, income
tax…).

The government of Ngô Đình Điệm carried out

a policy of export-oriented industrialization to
replace imported goods and set up trade
protectionism, tariff and non-tariff barriers
were created to protect light industrial
businesses. The result of this policy brought
about the first paper factory of Vietnam, An
Hao Paper Factory (1961) in Bien Hoa which
supplied 30-40% domestic paper demand.[15]
Imports of machinries, equipment, metals – the
input factors of the protected industries were
given priority, at the same time, export enjoyed
encourage measures with several exported
good received governmental subsidiary. The
exchange rate got adjustment in favor of
export. Export of this country gained smooth
achievement in 1955-1965. The government
implemented its roles in the economic
development through five-year economic plans
from 1957 to 1962.

Economy of the Republic of Vietnam in this

period proved to be progressive, however,
political conflicts and unrests (armed conflicts
between factions, continuous coup d'état,
emergence of the Viet Cong) confined the
efficiency of those policies.

1965–1969 stage
…

Trend of industrial, agricultural development of

the Republic of Vietnam

In this period, the underground economy was

booming, the budget deficit soared,
hyperinflation afflicted the economy and the
currency was repeatedly devalued, resulting in
an economic depression. The warfare caused
negative impact on economic growth,
especially the large scale Tet Offensive in
1968.

Rice production in 1000 tons[16]

In 1965, South Vietnam went from being a rice

exporter to an importer. Rice imports
continued until the dissolution of the state in
1975. This was caused by declines in crop
harvests from 1965 to 1968. The production
levels began to rise from 1968 onwards due to
the expansion of ricelands and increased
productivity. This was caused by the increasing
use of chemical fertilizers, mechanization and
new high-yield crop varieties. The right reason
for rice import until 1975 was that the rice
demand in VC-controlled zones increased, a
demand accompanied by more and more
intrusion of North Vietnamese troops to the
South Vietnam.[17]

From 1965, export-oriented industrialization

policy had to suspense, this led to difficulties
to many newly established sectors like textile,
cane sugar while some other sectors gained
the favorable to development. Industry
continued to grow, except in 1968 and 1972
when industry came to a standstill in the
context of the soaring war (Tet Offensive and
aerial raids of North Vietnam).

A notable event incurred in this period, known

by its code name as Campaign of Bong Lan
(Chiến dịch Bông Lan). This was a currency
reform conducted by Nguyễn Văn Thiệu's
administration from June 18, 1966 in which
new bank notes were issued and commonly
known as "bank notes of the second Republic.

1969–1975 period
…
On 26 August 1970 US ambassador Ellsworth
Bunker informed President Richard Nixon that
South Vietnam seemed to rely on the United
States not only for military support but also for
the basic economic commodities that
sustained its life. Overwhelmingly dependent
on imports, most of which were financed
through US aid or American military purchases
of piasters at a subsidized rate of exchange, it
thus continued to procure more than $750
million in goods and services per year abroad
while exporting at best $15 million in locally
produced merchandise.[18]

The economy of South Vietnam faced

difficulties caused by sudden decrease of
demand as the US and its allies steadily
reduced their armed forces from South
Vietnam over the 1970-72 period. Budget
deficit soared regardless of the fact that
domestic budget revenues and the US aids
increased while the government had to take
responsibility for military actions on its own.
Hyperinflation incurred in this period. In 1970,
the inflation rate (based on CPI in ordinary
people Saigonese people) reached up to
36.8%, and in 1973 this rate rose to 44.5%. In
last years of the Republic of Vietnam's
existence, the government went on to
introduce import limitations, export incentives,
and encouraged domestic consumption. This
led to the rise of exports, and a simultaneous
rise in imports.

Post 1975
…
After 1975, the economy of Vietnam was
plagued by enormous difficulties in production,
imbalances in supply and demand,
inefficiencies in distribution and circulation,
soaring inflation rates, and rising debt
problems. Vietnam was one of the few
countries in modern history to experience a
sharp economic deterioration in a postwar
reconstruction period. Its peacetime economy
was one of the poorest in the world and
showed negative to very slow growth in total
national output as well as in agricultural and
industrial production. Vietnam's gross
domestic product (GDP) in 1984 was valued at
US$18.1 billion with a per capita income
estimated to be between US$200 and US$300
per year. Reasons for this mediocre economic
performance included severe climatic
conditions that afflicted agricultural crops,
bureaucratic mismanagement, elimination of
private ownership, extinction of entrepreneurial
classes in the South, and military occupation of
Cambodia (which resulted in a cutoff of much-
needed international aid for reconstruction).[19]
With the start of the Đổi Mới economic reforms
in 1986 the Vietnamese economy began to
improve.

See also

References

Last edited 14 days ago by 14.248.110.237

RELATED ARTICLES

Economy of Vietnam
National economy

Quảng Ngãi Province

Province of Vietnam

South Central Coast

region of Vietnam

Content is available under CC BY-SA 3.0 unless

otherwise noted.

Terms of Use • Privacy • Desktop