ABSTRACT
After reuni¼cation, the communist government in the north imposed socialist planning in the south and harsh persecution and “re-education” of southern of¼cials and intellectuals, which generated a ½ow of 560,000 “boat people” ½eeing the country. The direct and immediate consequence of this suppression was a collapse of the Vietnamese economy. Collectivized farmers lost incentive to produce and private merchants were replaced by price controls,
state subsidies, and rationing. The problem associated with planning was recognized early but it took many years to of¼cially revise the policy, and the market mechanism was restored only gradually and in steps. Beginning in the late 1970s, partial and secret liberalization of agriculture, price system, and trade was attempted at local levels. By the early 1980s, many technocrats were supportive of the idea of introducing market incentives. Finally, Doi Moi (renovation) policy that af¼rmed the market mechanism was promulgated in December 1986 at the Sixth Congress of the Communist Party. However, the immediate economic challenge of the late 1980s was macroeconomic crisis centering on hyperin½ation. Macroeconomic control was restored around 1989, private enterprises were legalized in 1990, and prices were signi¼cantly liberalized in the early 1990s (Tran Van Tho, 2010). Policies and institutions supporting the market mechanism, such as the dismantling of collective farms, introduction of land use rights, state-owned enterprise reform, ¼nancial sector reform, and global integration, were also started in the 1990s. Many of them are still underway into the twenty-¼rst century.
