The global financial crisis and its impact on households: the case of urban Vietnam

Type Working Paper - Housing Markets and the Global Financial Crisis: The Uneven Impact on Households
Title The global financial crisis and its impact on households: the case of urban Vietnam
Publication (Day/Month/Year) 2011
Vietnam is a country in South East Asia with a total area of 331 690 km2
and a population
of 86 million (census April 2009), making it the 13th most populous nation in the world. The
country began its existence as a kingdom thousands of years BC, it fell under Chinese rule in
111 BC and regained its independence from China in 939 AD. It went through the First
Indochina War against the colonialist France in the period between 1946 – 1954, which
ended with the Dien Bien Phu battle, and the Second Indochina War 1955 – 1975 against the
USA, culminating in the unification of the divided country in 1976. As a result of post war
economic mismanagement and the economic embargo imposed by the US, the economy
came to a near-collapse in the early 1980s.
For over two decades since the major policy change, or reform, in 1986 under the name
of Doi moi (renovation), in which a centrally planned economy is gradually being replaced
by what is now officially termed ‘a market economy with socialist orientation’, Vietnam has
been emerging as one of the most dynamic economies in the Asia – Pacific region. It has
maintained an average growth rate of 7.9 per cent over the period between 1990 and 2000,
and by late 2009, it finally shed its long-held status as a low income country (with GDP per
capita at just USD 375 in 2000) to take on the new status of a medium-income country with a
GDP per capita at USD 1042.
The Doi moi economic reform process, in its own way, has created ‘profound enough
effects’ to qualify Vietnam as a transitional economy (Arkadie and Mallon, 2003). The three
most important features of Doi moi process include: i) a gradualist, rather than ‘big bang’
approach; ii) a relatively high rate of growth (as mentioned above); and iii) a substantial
reduction of poverty. Between 1992/3 and 1997/8, the proportion of the poor in the
population fell from 58 per cent to 37 per cent. By 2004 poverty was down to 20 per cent,
and based on the poverty line of under one US dollar per day in PPP, the figure was less than
10 per cent.
As a mainly agrarian society of wet - rice growers, the cultural traditions of Vietnam
placed enormous importance on the links of the people to their land and therefore their
homes, but during the turbulent historical times from the mid 1950s up to the beginning of
Doi moi in 1986, housing was ranked third or fourth in priority, after industry and
infrastructure (Hoang Huu Phe, 2002). The arrival of the market economy was to change all

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