Book review: From Plan to Market: The Economic transition in Vietnam by Adam Fforde and Stefan de Vylder. Boulder, Westview Press, 1996, pp. xv+358, £13.50 p/bk
✍ Scribed by John Weeks
- Publisher
- John Wiley and Sons
- Year
- 1998
- Tongue
- English
- Weight
- 62 KB
- Volume
- 10
- Category
- Article
- ISSN
- 0954-1748
No coin nor oath required. For personal study only.
✦ Synopsis
Of all the countries that have attempted the transition from central planning to market regulation, two stand out as striking success stories: China and Vietnam. These two countries, and only these two, avoided a period of severe economic contraction in the early stage of policy change. While one should resist the temptation to draw the inference that the transitional process in the two countries was essentially similar, an obvious and outstanding similarity can be noted: the powerful role played by the state in setting the pace and guiding the process of transition.
Both China and Vietnam were, are, and for the foreseeable future will be countries in which the state plays a dominant role in the economy. Given the success of transition in the two countries, there is a strong prima facie argument for considering state intervention to have been central to the solution rather than part of the problem. Yet, few economists do, and Fforde and de Vylder are no exception. While their approach is hardly the hard-edged ideology of the Washington Consensus', they clearly judge the Vietnamese state to have been more a problem than a facilitator of the country's success. The state (and the Communist Party) receive compliments in as far as it restricted and reduced its role. For example, in answer to the question, could hardship and transitional costs have been reduced, if the reforms had been carried out more rapidly?', they reply, We have an impression that the answer is yes' (p. 315). True, they go on to write that the gradualist approach in Vietnam . . . was preferable to any attempt at ``shock therapy'' . . .', but this is based on non-economic considerations, such as `regional imbalances and other tensions' (pp. 315±316).
This characterization of the authors' view of the transition process is not to suggest that they are orthodox ideologues. Quite the contrary, throughout their book, which is certainly the best survey of the Vietnamese transition, they make clear that they have limited faith in the neoliberal shock therapy' of the international ®nancial institutions. For example, they explicitly take issue with the conventional wisdom that macroeconomic stabilization must be applied early and zealously: the Vietnamese case does suggest that unorthodox sequencing may yield both better macroeconomic results and broader political support ' (p. 311). Nonetheless, when they come to list the Reasons for Success' (pp. 307±316), one looks in vain for positive comments on the role of the state. Quite the reverse: the state enters the discussion to be described as the loser' in the transition process which, one is told, `undermined the eciency (and moral authority and credibility) of central government ' (p. 312).
Certainly this book should be required reading for those interested in the Vietnamese transition. However, it is unfortunate that the authors chose to position their heterodox analysis within an essentially orthodox framework. The implicit orthodoxy manifests itself in heavy emphasis upon the distortions' of central planning, without ever providing a discussion of what that term means. The reader is left to conclude that they share the orthodox benchmark of Pareto Optimality as the non-distorted ideal. An attempt is made to provide a broader analytical framework with the postulation of a four-stage transition process (pp. 39± 40). However, the ®rst and last stages are before' and after' residuals, and the middle two may in practice be but one, as the authors themselves note (If reform is top-down these two stages are likely to be undierentiated . .