Vietnam After the War: Planning and Hunger

How Vietnam's economy struggled after reunification in 1975 under central planning and collective farming, leading to food shortages and hyperinflation.

In 1975, the Vietnam War ended and the country was reunified under the Communist Party.

Central planning

The state took control of industry and trade.
Farming was collectivised in the south, as it had been in the north.
Private business was restricted.

Results

Food shortages: farmers had little incentive to produce more on collective farms.
Hyperinflation: inflation reached several hundred percent in the mid-1980s.
Poverty: Vietnam was among the world’s poorest countries.
Isolation: a US trade embargo and conflict with China and Cambodia.

Aid dependence

Vietnam relied heavily on aid from the Soviet Union, which declined in the late 1980s.

The crisis that led to reform

By the mid-1980s, the failures of central planning pushed leaders towards change, leading to the Đổi Mới reforms of 1986.

Incentive lesson

When farmers couldn’t keep extra output, they had little reason to work harder, a classic incentive problem.

The collective farm

On a collective farm in the early 1980s, a family worked assigned fields but received the same ration regardless of effort. Output stagnated and rice was scarce.

Thinking Vietnam's growth started right after the war

The decade after 1975 brought food shortages and hyperinflation.

Key takeaways

Vietnam reunified in 1975 under central planning.
Collective farming weakened incentives.
Food shortages and hyperinflation followed.
Crisis led to the 1986 Đổi Mới reforms.