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
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, and 487 percent in 1989. However, the economy started to stabilize and inflation rates eventually declined to 17.4 percent in 1992, and 5.2 percent in 1993.
Inequality of Income
Economic growth rarely has equal distribution of benefits. The productive and strong are often rewarded much more than the economically weak. This often leads to further income disparity in a nation's economy. According to World Bank, the percentage of people who were living below basic needs level in the mid 1980s was in the region of 70-80%. Since the introduction of Doi Moi in 1986, the poverty rates have been driven down to 58% in 1993, and an even more desirable 15.9% in 2006. While this seems to suggest that most of the people have benefited from the economic growth, these figures do not reflect the distribution of the benefits. According to Viet Nam's General Statistics Office, the rural population in Viet Nam as of 1998 was 76.85% out of 75 million inhabitants. Glewwe's study of the 1998 Vietnam Living Standard Survey showed that out of the top 20% of households in terms of expenditure, 68.7% were from urban areas and only a third were from rural areas. This shows that even though the overall expenditure has increased, a very large...