The Costs of Doi Moi

Introduction

The Socialist Republic of Vietnam has seen significant economic growth in the past years. Doi Moi, a set of economic reform policies, was introduced in 1986. Trade barriers were lifted or reduced, and agricultural production saw dramatic improvement. Between 1998 and 2008, Vietnam saw an average increase of 7.2% per year in real income (World Bank, 2009). Living standards of the people in Vietnam, many of them farmers, have been improved, evidenced by the increase in gross national income. Poverty rates have seen a dramatic drop. Other indicators like enrollment of children in schools, child mortality rate, and external debt have also seen favorable change. However, economic growth also has its disadvantages. Some economists have argued whether most of the Vietnamese people are really better off than before the economic improvement in Vietnam.

The Costs of Economic Growth

Environmental Damage

When there is a drive for increase in output, it tends to put pressure on the nation's environment and that often results in increased pollution. The economic growth in Viet Nam has created erosion of forest land and the deterioration of land and water in the rural areas of Viet Nam. Other identified types of pollution resulting from industrial production include air, solid waste, noise, radiation and toxic chemical pollution. WHAT HAS BEEN DONE?

Risk of Inflation

With economic growth, there is always a danger present that demand may grow faster than the potential for production. This will lead to inflation, which will affect the country's competitiveness in the export and severely impact the living standards of the people. Viet Nam faced astounding rates of inflation in the years after Doi Moi, 400 percent in 1988...

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...that Viet Nam remains a competitive place for investors, and in turn ensure sustainable growth.

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