Economic Change

For centuries, countries along the North Atlantic Ocean dominated the international economic system, while Asia lagged behind. After World War II and particularly after 1970, Asia awakened economically. Many economists have since predicted that the global economic center will eventually shift from the North Atlantic to the Pacific.

Japan was the first Asian economy to emerge, followed by Taiwan, South Korea, Singapore, and Hong Kong. Ironically, some part of this progress was the result of the United States and its allies in the Vietnam War spending large sums of money maintaining their military troops in the area. Vietnam did not benefit from this expenditure. Rather, it suffered from the destruction of the war.

Still, this adversity may have hardened the character of an already disciplined people. Among Vietnam's neighbors, the Vietnamese are sometimes referred to as the "Prussians" of Asia. This is a reference to the section of Germany generally regarded as providing the most disciplined military forces during Germany's dramatic military prominence between 1850 and 1945.

Vietnam, a presumably communist state, persevered with its socialist system until after the collapse of the socialist system in the Soviet Union and its satellites in Eastern Europe. Vietnam stuck with the system, in part, because it felt it needed the Soviet Union's support to counterbalance China. In sticking with the socialist system, the Vietnamese ignored the progress China was making with its economic reform—an effort that started earlier than the Soviet reform.

After the Soviet Union's collapse in 1991, the Vietnamese had nowhere to turn. They evidently could not expect much from the Chinese. In any case, the Chinese made it clear that they were not interested in bailing out a country that would not undertake sensible reforms. Finally, the Vietnamese undertook economic reform and began to join some of their comparably sized Asian neighbors in economic growth. Vietnam also began to court

Better relations with Japan and the United States, again seeking at least some partial counterweight against the Chinese.

By the early years of the twenty-first century, Vietnam's economic reforms were beginning to give the country many of the characteristics of a market economy. In July, 2000, Vietnam reached a trade agreement with its former enemy, the United States. Under this agreement, American companies would be able to sell goods to Vietnamese consumers and Vietnamese goods would be allowed into the United States with substantially lower tariffs than before. In that same month, Vietnam opened its first stock exchange in Ho Chi Minh City.

Vietnam has shared some of the benefits of economic reform with its neighbors. It also shares the economic tension that exists throughout Asia as it sees other countries both as customers and competitors. Clearly, Vietnam would benefit considerably if it could share in the giant Chinese market, but first the Vietnamese must overcome their past animosity toward China and build a successful economic relationship.

Complicating this situation is the fact that Vietnam is one of many Southeast Asian countries with a sizable Chinese minority. This minority is economically successful within Vietnam. As is true elsewhere, native Vietnamese often display envy and jealousy toward the Chinese. In Indonesia in the mid-1960's, this attitude resulted in widespread anti-Chinese persecution and killing. Were this to happen in Vietnam, a Chinese reaction to help fellow Chinese could not be ruled out, especially since so many other pretexts for conflict exist.

Vietnam also faces the same risks of an economic downturn that its neighbors do. Rapid economic growth is often accompanied by significant economic corrections or recessions. Disorders are also possible where an economic downturn might spread from elsewhere in Asia.