Assess The Impact Of Globalization In Vietnam

Q: Assess the impact of globalisation on Vietnam and outline government strategies employed to promote economic growth and development

Government policies triggered the process of globalisation in Vietnam resulting in higher levels of economic growth and slowed economic development. Globalisation refers to the integration between different countries and economies and the increased impact of international influences on all aspects of life and economic activity. Vietnam has an emerging economy that is transitioning from centrally-planned towards a market-orientated economy. Government policies have been changed over time in response to varying economic goals. Vietnam’s emergence as a major economic player in the past few decades is the result

This resulted in stagnant economic growth and development with Vietnam’s GDP output falling to US$18.1 billion in 1984 meaning Vietnam was one of the poorest countries in the world. This poor economic performance is reflective of the ineffective second 5 year socio-economic development plan (SEDP), in 1976-1980, that failed to combat continuing inefficiencies and an ongoing inability to match supply and demand. Stagnant growth and lack of production resulted in slowed economic development seen through rising unemployment (20% in 1981) and poverty (90% of population living on less than $1.25 per day in 1981) culminating in Vietnam’s HDI of 0.463 in 1981 which indicates low human development. Hence it is evident that Vietnam’s failure to embrace globalisation and the closed nature of its economy adversely impacts upon economic growth and

The implementation of the Doi Moi reform resulted in higher level of economic growth. The reform employed wide spread changes including, allowing private enterprise to trade and invest with foreign entities. This resulted in a massive 4100% increase from US$5 billion in 1990 to US$205 billion in 2011 in its volume of trade, with US$97 billion in exports and US$107 billion in imports. Net Foreign direct investment (FDI) inflows have increased from levels of less than 1% of GDP in 1985 to 5.2% in 2013. Increase trade and FDI has allowed the private sector to thrive, resulting in an increase in annual GDP growth from 3.8% in 1985 to 6% in 2015, peaking at 9.5% in 1995. The Doi Moi reform has been successful in instigating sustained high economic growth after a period of stagnant economic activity. However, the SEDPs that have instigated economic have had varying impacts on economic development. In order to attract FDI, SEDPs have relaxed environmental and tax regulations resulting in the exploitation of the environment and the widening income inequality. Vietnam’s Environmental Performance Index (EPI) of 38.17 in 2015 ranks them 136 of 178 while their GINI co-efficient has increased from 0.357 in 1992 to 0.387 in 2012. Growing income equality and