Background
The decision of the Soviet Union to reduce aid to Vietnam posed serious economic, social and political challenges to this country. The union had stood by this country and supported it since the end of the Second World War. However, a decision was made to stop all forms of aid that supported Vietnam, and it became inevitable that this country would fail. However, there have been tremendous improvements in the lives of Vietnamese due to the high economic growth rate witnessed in recent years. This discussion examines the impacts of Vietnam’s economic growth rate on poverty and inequality.
The Vietnamese Communist Party (VCP) proposed an economic stimulus plan that involved gradual changes in the economy and political stability that gave preference to liberalization. Major policies were initiated in 1986, and this moved Vietnam’s economy from a centralized system to a free market. The policy had profound impacts on the economy and inequality in the following ways. VCP was influential in shaping the future of Vietnam and ensuring that its citizens lived a better life.
Main Text
First, the virtual de-collectivization of agriculture opened room for all people interested in farming to invest in this sector and develop the economy. Significant land reform policies were established to privatize ownership and ensure locals had a stake in building their nation (Turley and Selden Par. 2). The problem of food shortage was solved within months because people invested heavily in the agricultural sector. Moreover, job opportunities were created because more land was available for cultivation. The standards of living improved and this was reflected in the increase of the national gross domestic product and per capita income. The gap between the rich and poor was significantly reduced because people that were employed to work for the rich started earning income from their farms.
Secondly, the government allowed private employers to recruit a maximum of 10 workers. The economy expanded and absorbed most people in informal employment. Poverty levels decreased because of a lower dependence rate. A significant part of the population was active in employment, and this means that the numerous income-generating activities improved the economy of this country (Son 9). The income share held by the highest 20% of individuals increased while that of their counterparts decreased. The problem of social and economic inequality was controlled by the reduction of restrictions on private companies and increased autonomy for enterprise managers.
However, the elimination of direct subsidies and price controls was a significant boost in the agricultural sector. The use of modern technology in agriculture reduced the demand for human labor. Therefore, there were limited job opportunities in the agricultural sector (Turley and Selden Par. 4). Industries offered more opportunities than firms because the former required human labor to sustain the production and distribution processes. Moreover, modern technology replaced the need for human labor in firms.
Conclusion
The creation of new industry ad service jobs propelled the economy of this country by increasing employment opportunities and creating room for tertiary investments (Son 17). The rate of economic growth was spurred by a liberal economic and political system that targeted individuals with investment powers. Vietnam’s economy has tripled its productivity because more people invest their earnings in income-generating activities. The poverty gap decreased significantly because of the newly created employment opportunities. The transition from a centrally-based to a liberal economy motivated private investors to invest in the manufacturing sector.
Works Cited
Son, Hyun H. Poverty Centre. Vietnam: Jobs, Growth, and Poverty. Hangzhou: International Poverty Center, 2005. Print.
Turley, William S. and Mark Selden. Reinventing Vietnamese Socialism: Doi Moi in Comparative Perspective. San Jose State University Department of Economics, 2010. Web.