ABSTRACT
This chapter shows that the lack of competitiveness of state firms in socialist Vietnam cannot be entirely attributed to soft budget constraints. It examines why many state enterprises lack competitiveness despite a structure of relations in these firms that corresponds more closely than in private ones employing non-family labor to the values of hierarchy and stable social interdependence nurtured by the family and fostered by the Vietnamese state. In December 1986, the Sixth Congress of the Vietnamese Communist Party officially sanctioned the emergence of a multiple-sector economy. The socialist-oriented economy was centrally planned with the goal of rapid industrialization through state control of key resources and marketing of output. The growing informal economy also undermined the state's control of final product distribution. The economic crisis of 1978-1979 led to a number of piecemeal measures and concessions by the state with far-reaching effects on the economy.
