Doi moi as a potential model for post-socialist African countries?

Balazs Szalontai aoverl at yahoo.co.uk

Sat Dec 5 09:46:34 PST 2015

Dear All,

let me ask you for some comments on the preliminary conclusions of a research project I am currently doing for the Korea Development Institute (KDI) School, Seoul. The project examines if Vietnam's post-1986 economic development might be a more suitable potential model for Least Developed Countries (LDCs) than the East Asian Newly Industrialized Countries (NICs), on the grounds that at the start of its reforms, Vietnam was also a largely rural country whose exports were dominated by agricultural and mineral products. It compares Vietnam's performance with eight Africancountries (Angola, Benin, Congo-Brazzaville, Ethiopia, Guinea, Guinea-Bissau,Mozambique, and Zambia), which had also pursued statist economic policiesbefore they switched to market-oriented reforms.

I paid particular attention to the success of export-oriented industrialization (or lack thereof) in Vietnam and the selected countries. According to the data of UN Comtrade and other databases (from the mid-1980s to 2008), post-1986 Vietnam has indeed diversified its export structure to a greater extentthan any of the selected African countries. Vietnam proved equally capable ofexporting rice, cash crops (cashew, rubber, and coffee), oil, and variousindustrial products (such as textiles and clothes). In contrast, only Tanzaniaand Mozambique showed a limited potential for export-oriented industrialization, and the results were either ephemeral or very narrow in scope. Countries rich in oil reserves (Angola, Congo-Brazzaville) or othermineral resources (Guinea, Zambia) displayed a high level of resourcedependency, while Guinea-Bissau and Ethiopia showed structural inflexibility inagricultural exports (the long-term dominance of cashew nuts in Guinea-Bissau, and coffee and leather in Ethiopia).

Trying to identify the reasons of these differences between Vietnam's more successful performance and the African countries' less successful performance, I have reached the following preliminary conclusions:

(1) Factors of historical background: The industrial capacity of pre-1985 Vietnam was significantly, though not disproportionately, greater than that of the selected African countries (see, among others, steel and textile production). The foundations of this capacity had been laid partly in the period of state socialist industrialization (heavy industry) and partly in pre-1975 South Vietnam (textiles). This gave Vietnam a certain head start. Similarly, the administrative and financial capabilities of the pre-1985 Vietnamese state, though limited in many respects, were greater than state capabilities in the selected African countries. In the colonial period, there were, in general, more extensive linkages between European-owned textile enterprises and local handicrafts in Southeast Asia than in Africa, but I need to investigate this in greater depth in the specific case of Vietnam.

(2) Factors of economic environment: The economic profile of Vietnam's neighbors was suitable for Vietnamese economic diversification and EOI. Interactions with the more developed ASEAN countries created markets for various agricultural products and attracted FDI to the industrial sector. Interactions with China have been more inimical to diversification, because China's own EOI drive posed a competition, and China's demand for Vietnamese bauxite and other raw materials potentially reinforced resource dependency. Still, in the case of the cashew sector China has been a better partner for Vietnam than India has been for cashew-producing Guinea-Bissau and Mozambique. Due to its own cashew-processing industry, India was more interested in importing raw cashew than processed cashew, and since Indian importers offered higher prices to African cashew cultivators than the local cashew-processing enterprises could afford, domestic cashew industries found it difficult to survive in a deregulated economy. In contrast, China, not being a cashew producer, was willing to import Vietnamese cashew in processed form. Those African countries that were extensively linked to a far larger neighboring economy (Congo-Brazzaville to Congo-Kinshasa, Benin to Nigeria, Mozambique to South Africa) received more stimuli to developing the re-export sector or the service sector than to EOI.

(3) Factors of economic profile: Vietnam's capability to export rice in large quantities (a potential that existed in Cochinchina and the RVN, then declined during the Vietnam War and the first decade of the SRV, and revived after 1988) distinguished it from the selected African countries where agricultural exports were rarely composed of the same types of basic foodstuffs consumed by the local population. These countries usually exported cash crops like coffee, sisal, cotton, groundnuts, and cashew nuts; staple foodstuffs consumed by the rural producers (like millet, sorghum, and cassava) were rarely exported, and the urban population increasingly relied on grain imports.

(4) Factors of infrastructure: Vietnam's transport infrastructure and post-1987 electric power supply was in a relatively better shape than that of the selected African countries, most of which have large areas that are sparsely populated and lack an efficient road network, and most of which suffer from serious power shortages that hinder the operation of industrial enterprises.

(5) Factors of state involvement: It seems that Vietnam’s better performancedid not result from a greater extent of deregulation. Actually, state involvementhas remained relatively substantial in post-1986 Vietnam, whereas in Tanzania andMozambique, drastic privatization and import liberalization produced an adverseeffect on the manufacturing sector. That is, market-oriented reform was anecessary but not sufficient precondition of a successful EOI policy. Vietnam's post-1986 economic reforms were not as extensively influenced by debt service and the conditions set by the international financial institutions as it was the case in most African countries.

(6) Factors of social structure: For reasons that still have to be clarified, industrial entrepreneurship and industrial workers seem to have achieved greater prominence in Vietnamese society, both before and after 1986, than in the African countries. Formal and informal private entrepreneurship has been very widespread in many African societies (particularly in Benin, Guinea, and Congo-Brazzaville), but it was oriented more toward trade than manufacturing. In several countries, agriculture was of a slash-and-burn type, and even if rural settlements were of a more permanent nature, irrigation was rarely practiced for various reasons.

On the basis of these observations, I am somewhat skeptical if the experiences of Vietnam can be easily adopted by other LDCs. At the same time, I do not intend to present Vietnam as a model in an over-normative way, because the economic and social problems of Vietnam's recent development, ranging from difficulties of SOE reform to rural poverty and income inequalities, are well known. Nor do I want to lump together the selected African countries in an indiscriminate way, since the problems of Congo-Brazzaville or Angola are in many ways quite different from that of Ethiopia or Tanzania. Still, I am most interested in the opinion of other list members with regard to the possible applicability (or non-applicability) of Vietnam's experiences to African (or non-African) LDCs. If you feel that any of my observations is inaccurate, simplified or downright erroneous, please point it out as critically as possible, and if I have overlooked any important aspect, please tell me what else should be added.

With many thanks in advance,Balazs SzalontaiKorea University, Department of North Korean Studies

Thomas Jandl thjandl at yahoo.com

Sat Dec 5 14:42:06 PST 2015

I would list two serious limits to Viet Nam as a model for (most of the) African countries.

(1) If you know my book (Viet Nam in the Global Economy -- just out in paperback by Lexington, if I may put in a plug), you know that I credit interprovincial competition for much of the economic performance. Provinces were able to show credible commitment to investors (foreign, but also domestic) as investors could go elsewhere if a local elite became too predatory. That also implies that provinces had to compete with good business climate -- but they couldn't engage to the famous race to the bottom because of the central governments monopoly on taxation and its rules on minimum services. (I wanted to call my book "Race to the Top," but then the Obama Administration used that for its education reform.)

Most African countries can't emulate Viet Nam. The reason is that in order to outsource regulations and the creation of business climate to local officials, you have to be able to trust as well as control them. That was the case in economically decentralized, but politically very centralized, single-Party Viet Nam. It is much less possible in most African countries, many of which lack a strong central government and in some cases have governments that don't even control the entire territory. The key aspect of Viet Nam's reforms -- a reasonably strong state -- is simply not fulfilled in many African countries. (Note that there is a recent book on the state in modern Viet Nam that discusses how string the state really is "Politics in Contemporary Viet Nam," edited by Jonathan London -- I have a chapter in there where I explain more what I am saying in this email.)

(2) The second reason why Viet Nam -- and East Asia in general -- is unlikely to yield much applicable information for most African economies is social composition. The Developmental State theorists made clear that a key factor in Korea's, Taiwan's, and now, I argue, also Viet Nam's growth was social homogeneity. If you can easily justify oppressing one large group (for ex. the 80% Shiites in Iraq, or any ethnic divisions in many African countries), redistribution becomes the easy and thus probably preferred option for rulers to reward their win coalitions. Why do a lot of work creating wealth if you steal and redistribute it?

You are aware of the divide-and-conquer policies of the colonizers, by which they co-opted smaller ethnic groups to work with them and in return gave them some power and wealth. These groups then stayed in power after independence, ruling over the oppressed majorities. This never happened in Viet Nam (although the French and US tried to co-opt the Montagnards, but obviously they never took power in Viet Nam, colonial or post).

Viet Nam is an ethnically rather homogeneous state and due to communism didn't have many socio-economic difference either. Same with Korea after WWII, and Taiwan when the KMT arrived there as an invading military class. So they couldn't justify taking it from the 80% to reward the 20%. They had to create wealth rather then redistributing it. Very different in ethnically, religiously divided African countries where redistribution is the key to create coalitions. (Interesting statistic by Bill Easterly about Ghana, where thegovernment handed out the cocoa benefits to the Ashanti group,ripping off the non-Ashanti cocoa producers. The growers received 50%of market value in 1949 (under colonialism), 6% of market value in1983.)

So I think social polarization and the resultant weak states are crucial hindrances for Viet Nam-style development in many African countries.

____________________________Thomas Jandl, Ph.D. Non-Resident Scholar Viet Nam National University -- Ha Noi Partner, TJMR Asia Consultants Washington: 443-901-2612 Viet Nam mobile: 0126 558 2026 thjandl at yahoo.com

Marc Gilbert, Ph.D. mgilbert at hpu.edu

Sat Dec 5 18:04:46 PST 2015

I am writing to confirm Thomas Jandl' s research and encourage any graduate students who would like to extend it.

The literature--novels and plays--in Tanzania about social and economic reformation (called "the Changes" in Tanzania) was very similar in tone to that of the early doi moi era literature in Vietnam. This attracted me as a world historian to try to compare the two. That project died for lack of funding, but not before I was able to do some preliminary work via a Fulbright in Tanzania and visits to Vietnam in the 1990s. In Africa, I think the Chama-cha Mapinduzi (the Tanzanian Communist Party) had made a faster, better, go of it along the same time scale (from1986). Unlike many African states, its state apparatus was quite strong. Cameroon, where I worked on a earlier research project, was and remains the poster-child for regionalism and caudillo- style dictatorship under which, as Thomas notes, wealth redistribution, not wealth creation, is the norm.

Like Vietnam, Tanzania was able to dictate matters in terms its educational system and dominate agricultural policy. In Tanzania, many farmers were resettled from villages and their fields to be closer to roads where the state could better provide services. The party later admitted this to have been a horrible mistake arising from ideological over-enthusiasm. "It [that policy] was stupid. We were young intellectuals, what did we know about farming?" one cadre member told me). Parallels then seemed to abound in Vietnam; at the time, I was impressed with cadre humility in Tanzania compared with officials in Vietnam.

The comparison between how the central governments of Vietnam and Tanzania have managed their multi-ethnic and regional issues seemed to me to favor the Tanzanian practice, in part, perhaps, because while Ho Chin Minh and Julius Nyerere both sought to fairly resolve ethic and regional problems, only Nyerere lived long enough to use his cult of personality to resolve them perhaps more fairly and pragmatically. However, for Nyerere, there was nothing like kinh massive plurality and the traditional marginalization of minorities to deal with. Further, the room for pragmatism employed by Nyerere was much larger compared to that available to post-war Vietnamese leadership due to the conditions faced by these two regimes during and after the Cold War: Tanzania was boycotted by the US, and accepted (largely symbolic) aid from Communist China, but McNamara absolved Nyerere of the stigma of "if you are not with us you are against us" label. Not much similar there with Vietnam. Moreover, I have always believed that the wars in Vietnam, as do all wars, confirmed the ideology of the surviving victors, in this case, communist hardliners., rendering the road to renovation longer and slower.

If anyone has a grad student interested in such comparative work in the cultural sphere (including reaction to globalization) I would be happy to try to dig up my grant proposal (pre-digital age) for them to use wholly as their own. My closest Tanzanian colleague was later killed in a car accident, but I may still be able to reconstruct some of my contacts there for them. My closest colleague in Cameroon has also died, but my remaining contacts there might be revived for them. Comparative study in cultural terms, may still be open for graduate study. The predominance of English language in the literary products of the Anglophone African response to social and cultural renovation after 1986 (including globalization) means that Vietnamese students, who are often directed to English or French (useful in Francophone Africa) will be well-equipped to begin their research. As for kisSwhaili, "Hakuna Matata! (no worries).

FYI, as I am sure Thomas knows, an early comparative study of economic reform in Vietnam and Tanzania (2004) was completed under the auspices of The William Davidson Institute at the University of Michigan Business School, by Brian Van Arkadie and Do Duc Dinh, as "Economic Reform in Tanzania and Vietnam: A Comparative Commentary" that can be accessed on-line at:

http://deepblue.lib.umich.edu/bitstream/handle/2027.42/40092/wp706.pdf?sequence=3&isAllowed=y

For an early account of reformation in Tanzania, see: Tanzania’s Economic Reforms—and Lessons Learned by Anna Muganda (2004) athttp://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.500.4963&rep=rep1&type=pdf.

Best,

Marc

Joe Berry joetracyberry at gmail.com

Sat Dec 5 18:42:14 PST 2015

Balazs and list,

This is a hugely interesting piece and I hope it sparks a lot of discussion. Many extremely interesting points and very good questions. I personally have not seen this comprehensive an analysis of this question elsewhere (but I am not nearly as schooled on these topics as many on this list.)

Personally, I would add that the experience of war in the various countries was different (though most did have a liberation war). VN after 1954 was able to conduct its war using NVN as a developing base area that was a stable recognized nation in its own right. It did not have to depend on the liberated areas the NLF (and later PRG) could establish and defend alone in the South, which was much more the like cases in most of the African examples. I think this may have had serious implications for economic envelopment for many decades, and still now. And, of course, the leadership in the N, Ho Chi Minh et al, is now conceded to have had majority support in the whole country in 1954 at the end of the French War, which is the main reason the subsequent Geneva Agreement elections for unification were never allowed to occur. Certainly Eisenhower and the CIA thought so, as the record reveals.

I would also note that while a substantial % of VN population is of non-Viet ethnic minority background, this (and language) may not have been as great a factor in the war and post-war experience in VN as in at least some of the African nations mentioned, where these factors devolved into near civil war in some cases. In other words, the basis for VN nationhood and nationalism was much more solid.

Finally, I think one also needs to go back a bit further in history for some causative factors. VN and Africa were both fully colonized in the 19th century, but VN had been fairly isolated (excepts for relations with China and some other neighbors) before then. In contract, many of the African countries had already, by the time of colonization, been the target of massive slave trading for many decades by both Europeans and Arabs and some had their populations decimated by this, and of the young working age population especially. To say this distorted their potential for development and changed their developmental paths would be a great understatement. Walter Rodney, of course, is perhaps the best reference on this, but there are many others.

Thanks for reading this. I am very interested in the reactions. Glad this list exists.

Joe Berry

joetracyberry at gmail.com

Joe Berry & Helena Worthen

Faculty of Labour Relations & Trade Union - Ton Duc Thang University

19 Nguyen Huu Tho Street, Tan Phong Ward, District 7, Hochiminh City, Vietnam

0935002920 (phone in case the postman want to contact)

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Balazs Szalontai aoverl at yahoo.co.uk

Sun Dec 6 01:19:25 PST 2015

Dear Thomas,

thanks a lot for your thoughtful comments! I wholeheartedly agree with the point that the Vietnamese state was considerably stronger than most African states were (with the partial exception of pre-reform Guinea and Tanzania). The issue of productive inter-provincial competition is a very interesting one, all the more because it is interrelated with other factors, such as ethnic homogeneity/heterogeneity, the proportionate/disproportionate representation of regional interests, the scope of the transport network, and so on. If certain regions are adversely affected by political discrimination or geographical isolation, they cannot easily participate in such a productive inter-provincial competition. This was definitely the case in many African countries when the inland provinces were in a disadvantageous situation in comparison with the coastal ones, even if there was no politically and ethnically motivated regional discrimination; the rail and road network was simply too underdeveloped to effectively integrate them into international trade beyond the export of a few natural resources (minerals, timber, etc.). I am curious whether Vietnam's post-1986 development has aggravated, perpetuated, or alleviated the historical inequalities between North, Center, and South, between lowlands and highlands, and between coastal and inland areas.

I also fully agree with your view about the detrimental effects of ethnic and regional discrimination. This is a particularly serious problem if the country has a historical tradition of resource dependency (such as rich reserves of oil, bauxite, etc.), because if state power is captured by a specific group, it can maintain its rule over the other groups by acting as a rentier state. In Angola, Congo-Brazzaville, and Guinea, these two factors were certainly interlocked in one way or another. Let me ask how you would explain that in Vietnam, the the country's oil and bauxite reserves, despite their obvious importance, have not distorted the overall economic structure to such an extent as to create a comparable resource dependency, and hinder export-oriented industrialization.

With much gratitude,Balazs

Balazs Szalontai aoverl at yahoo.co.uk

Sun Dec 6 02:04:31 PST 2015

Dear Marc,

thanks a lot for your very helpful comments! Yes, I have read the comparative analysis written by Van Arkadie and Do Duc Dinh, and I liked it very much, not the least because they dared to defy the view that Vietnam's better performance resulted from a more extensive deregulation. I also found a few other publications that might be of interest to you and other list members:

Damian MulokoziGabagambi, “Post-liberalisation Paradox in TextileIndustry: A Comparative Study of Vietnam and Tanzania,” International Journal of Business and Social Science, Vol. 4 No. 8 (July 2013), pp. 191-201.Blandina Kilama, “The diverging South:Comparing the cashew sectors of Tanzania and Vietnam.” African StudiesCollection Vol. 48 (Leiden: African Studies Centre, 2013). Jamal B. Msami, “The Textile Industry in Vietnam and Tanzania,” inBernard Berendsen et al. (eds.), Asian Tigers, African Lions: Comparing theDevelopment Performance of Southeast Asia and Africa (Leiden: Brill, 2013),pp. 391-416.Jan Kees van Donge, “Differential Supply Responses to Liberalization,and Resultant Poverty Alleviation in Vietnam and Tanzania,” in Asian Tigers, African Lions, pp. 341-366.

Your observations are most illuminating, all the more so because they are not so normative as to present the African countries indiscriminately in a negative light. It is definitely true that in various respects, Tanzania was a more promising case than some of the other countries on my list, lacking the insane state terror of Sekou Toure's Guinea, the selfish elitism of Benin, or the resource dependency of Angola and Congo-Brazzaville. Fortunately, it is a country of many small ethnic groups (Nyerere's group was particularly small), without strong regional divisions and regional blocs, and the army was politically neutralized after the incidents of the mid-1960s. I would be very interested in reading your earlier materials on Tanzania if possible.

With much gratitude,Balazs

Balazs Szalontai aoverl at yahoo.co.uk

Sun Dec 6 03:46:37 PST 2015

Dear Joe,

thanks a lot for your comments! These are all very interesting points. Of the selected African countries, only the former Portuguese colonies (Angola, Mozambique, and Guinea-Bissau) underwent a prolonged liberation war, but one may also add Ethiopia on the grounds of that there were persistent guerrilla struggles in some minority areas (particularly Eritrea). In Angola and Mozambique, the post-colonial regimes were regionally and ethnically imbalanced, because certain regions and groups were underrepresented in the leaderships or even actively opposed to the ruling elites, and thus the state could not fully control the whole territory of the country. In comparison with these cases, Hanoi's post-1975 control over the South was stronger and more stable. Still, I am inclined to believe that the success of the reform policy was considerably facilitated by the fact that the SRV regime could not really "digest" the southern society, and eventually felt compelled to make economic concessions to it. This brings us back to Thomas' observation about the optimal combination of central political control and economic decentralization in Vietnam.

With many thanks,Balazs