ABSTRACT
Post Second World War economic and political developments in the three transitional economies of the Mekong region bear some striking similarities and significant differences (see Appendix 1, Tables 11.A1-11A.3 for a brief sketch of developments in these three economies). All three countries emerged from French colonial rule in the first half of the 1950s. By 1975, Vietnam and Lao PDR adopted Soviet-style central planning but, in effect, due to the mountainous terrain and poor infrastructure resulting in difficulties of communication and central control in that country, only about 50 per cent of the farms in Lao PDR were collectivized (Warr 2000). On the other hand, Cambodia, under the Khmer Rouge, underwent a severe form of central planning, resulting in the destruction of all business and market activities, as well as isolation from the world economy, with its people living on subsistence agriculture. Vietnamese occupation of Cambodia in 1979 saw the continuation of central planning and heavy reliance on Soviet aid for all three countries. However, with the imminent collapse of the former USSR towards the latter part of the 1980s and the withdrawal of Vietnamese troops from Cambodia in 1989, all three countries embarked on market-oriented reforms, with the implementation of Doi Moi (or ‘economic renovation’) in Vietnam in 1989, the NEM (the ‘new economic mechanism’) in Lao PDR in 1990, and serious reforms and resumption of relations with international financial institutions in Cambodia in 1993.
