sustainabilty
EADN RP1-10
EADN Regional Project on the Social Impact of the
Asian Financial Crisis
Social Impact of the East Asian Crisis and Household
Coping Mechanisms in Vietnam
By
Tran Tho Dat
January 2002
1
INTRODUCTION
The Vietnamese government launched the innovation (doi moi) programme in 1986, with a significant degree of market orientation to unleash the productive capacity of the country and a gradual opening up to the regional and global communities. Although the performance of the Vietnamese economy has been quite impressive since the launch of the reform process, a study published by the United Nations in 1996 (UNDP and UNICEF 1996) warned that the economy appeared to be heading towards its own major financial crisis for many of the same reasons that a number of countries in East Asia suffered from the Asian crisis. The study concluded that while the general macroeconomic picture still looked impressive in Vietnam, a more detailed analysis strongly indicated that the existing framework of incentives, processes and government appeared financially unsustainable (UNDP, 1998b).
The primary objectives of this paper are to analyse the impact of the regional crisis in
Vietnam on both selected economic and social indicators and to examine the coping mechanisms of households. The paper is organized as follows. The next section mainly assesses the impact of the regional crisis on the economy, followed by an analysis of the social impact of the economic crisis. The effects on households, and the coping mechanisms used by households are discussed in the following section. The concluding section offers some policy responses and attempts to draw some lessons from the crisis.
IMPACT OF THE ASIAN CRISIS
When the regional financial crisis broke out in 1997, it was believed that the crisis would have very little effect on Vietnam’s economy. There were several reasons for this belief.
First, the Vietnamese economy was still mainly
EADN Regional Project on the Social Impact of the
Asian Financial Crisis
Social Impact of the East Asian Crisis and Household
Coping Mechanisms in Vietnam
By
Tran Tho Dat
January 2002
1
INTRODUCTION
The Vietnamese government launched the innovation (doi moi) programme in 1986, with a significant degree of market orientation to unleash the productive capacity of the country and a gradual opening up to the regional and global communities. Although the performance of the Vietnamese economy has been quite impressive since the launch of the reform process, a study published by the United Nations in 1996 (UNDP and UNICEF 1996) warned that the economy appeared to be heading towards its own major financial crisis for many of the same reasons that a number of countries in East Asia suffered from the Asian crisis. The study concluded that while the general macroeconomic picture still looked impressive in Vietnam, a more detailed analysis strongly indicated that the existing framework of incentives, processes and government appeared financially unsustainable (UNDP, 1998b).
The primary objectives of this paper are to analyse the impact of the regional crisis in
Vietnam on both selected economic and social indicators and to examine the coping mechanisms of households. The paper is organized as follows. The next section mainly assesses the impact of the regional crisis on the economy, followed by an analysis of the social impact of the economic crisis. The effects on households, and the coping mechanisms used by households are discussed in the following section. The concluding section offers some policy responses and attempts to draw some lessons from the crisis.
IMPACT OF THE ASIAN CRISIS
When the regional financial crisis broke out in 1997, it was believed that the crisis would have very little effect on Vietnam’s economy. There were several reasons for this belief.
First, the Vietnamese economy was still mainly
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