| US economic and military aid to South
Vietnam grew through the 1960s in an attempt to bolster the government,
but US armed forces were withdrawn following a cease-fire agreement
in 1973. Two years later, North Vietnamese forces overran the South
reuniting the country under Communist rule. Despite the return of
peace, for over a decade the country experienced little economic growth
because of conservative leadership policies.
However, since the enactment of Vietnam's "doi moi"
(renovation) policy in 1986, Vietnamese authorities have committed
to increased economic liberalization and enacted structural reforms
needed to modernize the economy and to produce more competitive,
export-driven industries. The country continues to experience protests
from various groups - such as the Protestant Montagnard ethnic minority
population of the Central Highlands and the Hoa Hao Buddhists in
southern Vietnam over religious persecution. Montagnard grievances
also include the loss of land to Vietnamese settlers.
Growth averaged around 9% per year from 1993 to 1997. The 1997
Asian financial crisis highlighted the problems in the Vietnamese
economy and temporarily allowed opponents of reform to slow progress
toward a market-oriented economy. GDP growth averaged 6.8% per year
from 1997 to 2004 even against the background of the Asian financial
crisis and a global recession. Since 2001, Vietnamese authorities
have reaffirmed their commitment to economic liberalization and
international integration.
They have moved to implement the structural reforms needed to modernize
the economy and to produce more competitive, export-driven industries.
The economy grew at an average annual rate of 8% in 2005-07. Vietnam's
membership in the ASEAN Free Trade Area (AFTA) and entry into force
of the US-Vietnam Bilateral Trade Agreement in December 2001 have
led to even more rapid changes in Vietnam's trade and economic regime.
Vietnam's exports to the US increased 800% from 2001 to 2006. Vietnam
joined the WTO in January 2007, following over a decade long negotiation
process.
This should provide an important boost to the economy and should
help to ensure the continuation of liberalizing reforms. Among other
benefits, accession allows Vietnam to take advantage of the phase-out
of the Agreement on Textiles and Clothing, which eliminated quotas
on textiles and clothing for WTO partners on 1 January 2005.
Agriculture's share of economic output has continued to shrink,
from about 25% in 2000 to 20% in 2006. Deep poverty, defined as
a percent of the population living under $1 per day, has declined
significantly and is now smaller than that of China, India, and
the Philippines. Vietnam is working to create jobs to meet the challenge
of a labor force that is growing by more than 1 million people every
year. Vietnamese authorities have tightened monetary and fiscal
policies to stem high inflation. Hanoi is targeting an economic
growth rate of 7.5-8% during the next four years.
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About Vietnam
