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The Developmental State,’ the Evolving International Economic Order, and Vietnam

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‘The Developmental State,’ the evolving international economic order, and Vietnam. by Hung Hung Pham A thesis submitted to the University of Birmingham for the degree of DOCTOR OF PHILOSOPHY Department of Political Science and International Studies College of Social Sciences The University of Birmingham April, 2012 University of Birmingham Research Archive e-theses repository This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder. Statement of Authenticity I declare that this thesis is my own original work and all sources have been acknowledged. Hung Hung Pham April 2012 Abstract The developmental state has been widely credited as the most important factor behind the East Asian post-war “miracles.” Indeed, it is generally seen as having helped to shift the weight of the international economic order towards ‘the East.’ However, the dominance of processes associated with ‘globalisation’ at the beginning of the twenty-first century is commonly thought to have substantially undermined the viability and potential of this state- led development model. Yet, the recent rapid transformation of some emerging economies, notably China and Vietnam, suggests that this economic development model may remain important even in an era of globalisation. Taking Vietnam as a case study, this thesis argues that despite significant differences in the actions, capacities and ideological orientations between the Vietnamese state and other states in the region, the political leaders of Vietnam have followed the interventionist, state-led pattern of development that is connected to the successful East Asian developmental states. As a consequence, and on the basis of the original empirical research undertaken here, the thesis further argues that despite the potentially transformative impact of processes associated with globalisation, the developmental state, or the state-led development model, remains a viable, influential, and persistent feature of the development processes in Vietnam. ii Acknowledgements I never thought that I would continue studying ten years after graduating from my bachelor degree, or five years since my master’s degree. But the opportunity arose and made me re- think my decision. The first people I must thank are my wife and our lovely children, who supported me greatly on my first decision of undertaking the project, as we had never lived far from each other for about a week, thus, what would happen when this course takes at least three years? In addition, they have encouragingly supported me during my hardship of doing this research. For this reason, I would also like to thank my two fathers and my mother and other members of my extended family for their great help and encouragement for myself and my own family from the beginning to the end of my research project. In terms of financial support, I owe a lot to my sponsor, Project 100 of Haiphong City. But more specifically, I would like to sincerely thank all the pioneers of the project for their resolute commitment despite significant initial challenges and difficulties. Additionally, my special thanks are given to Mr Hung Manh Dang, the head of the Project Office, and all other members of the office, notably Ms Linh Dieu Mai, who have helped me much more than just what a financial sponsor can normally do. Moreover, I always understand that I have been sponsored by all the people and institutions having contributed to our state revenues, and for whom I would like to express my great thanks now and wish to pay back as much as possible by my future devotion. Most important to the success of my research has been my supervisors, Professor Mark Beeson and Doctor André Broome. I have always thought that how lucky I am to have such kind, nice, considerate, and encouraging supervisors. I have been deeply indebted and do not know how to thank Mark Beeson, my former lead supervisor, and still my external supervisor now even though Mark has moved to Australia. From the bottom of my heart, I always regard iii Mark as my third father for his kindness and great support and for my personal feelings. The same thanks I would like to give to André Broome, my current lead supervisor, who has been enthusiastically helpful and extremely encouraging. Mentioning my sincere thanks to my supervisors, I cannot forget to thank Julie Gilson, whose early advice on the project was also helpful, especially her recommendation about Mark as a suitable supervisor for me. My study would have followed another direction if I had not had Julie’s help at the beginning. Last but not least are all other academic staffs and my colleagues at our POLSIS Department who have significantly and encouragingly helped me in both my study and my personal life since I first arrived in Birmingham. I will definitely keep missing our POLSIS family forever! iv Table of Contents Introduction 1 Chapter 1: Conceptualising the Developmental State 16 1.1. The State Debate 20 1.2. Theoretical Origins of the Developmental State 28 1.3. A Shift in Focus 38 1.4. The Persistence of Developmental States 48 Conclusion 55 Chapter 2: The Developmental State Model and Analytical Tools 58 2.1. Sino-centric Legacies and the Preconditions for the DS 60 2.2. A ‘Sketchy’ Model of the Developmental State 65 2.3. A More Detailed Model 73 2.4. The Ideal-typical Model of the Developmental State 82 2.5. Methodology 93 Conclusion 100 Chapter 3: Vietnam through the Developmental State Prism 104 3.1. On the Long History of Vietnam 107 3.2. Vietnam and the Central Planning System 114 3.3. Vietnam and the Reform 121 3.4. The Socio-political System 132 3.5. Assessing the Vietnamese State’s Elements and Features 147 Conclusion 163 Chapter 4: The Central Mechanism of State Intervention 167 v 4.1. The SOE Reform: Picking and Creating National Champions 169 4.2. Reforming the SOCBs: Renewing the Financial Tool 184 4.3. Active Control of State Budget 197 4.4. State-business Close Relations: the Logic of State Management 207 Conclusion 218 Chapter 5: Transforming Agriculture: the Bold Imprints of the State 221 5.1. Vietnam’s Agriculture before 1989 223 5.2. Agricultural Transformation since 1989 230 5.3. Vietnam’s Conditions and Agricultural Development 244 5.4. The Indispensable Role of the State in Agricultural Development 251 Conclusion 267 Chapter 6: Assessing the Course of Industrialisation 271 6.1. An Overview of Vietnam’s Industry 273 6.2. Legal Framework Adjustments 287 6.3. Identifying Strategic Industries 295 6.4. The State’s Roles in the Labour-intensive Industry 305 Conclusion 320 Conclusion 325 List of References 350 vi List of Illustrations Charts: 4.1 - Structure of production capital by economic sector from 2000-2007 172 4.2 - Investment capital by economic sector from 1995 - 2009 in 1994 price 173 4.3 - Production capital of SOEs from 2000-2007 174 4.4 - Annual turnover of SOEs from 2000-2007 174 4.5 - GDP in 1994 price by economic sector from 1995-2009 175 4.6 - Number of SOEs on 31 December annually 180 4.7 - Production Capital of SOEs 2000-2007 180 4.8 - Production capital of Central and Local SOEs in 2007 181 4.9a - Structure of share of Vietcombank in 2007 and 2010 190 4.9b - Structure of share of Vietinbank in 2008 and 2010 190 4.10a - Percentage of loans to SOEs of BIDV from 2002-2007 194 4.10b - Vietcombank's percentages of loans to SOEs from 2005-2010 194 4.10c - Vietcombank's amounts of loans to SOEs from 2006-2010 195 4.11a - BIDV's Annual Net Profit 2003-2009 196 4.11b - Vietcombank's Annual Net Profits 2006-2010 196 4.12a - Revenue collection and spending of selected surplus localities in 2008 199 4.12b - Revenue collection and spending of selected deficit localities in 2008 200 4.13 - Some major sources in the structure of state revenues from 2000-2007 201 4.14 - Some components of the state budget of 2010 206 5.1 - Total value of agricultural production in 1994 price 231 5.2 - Grain outputs 1990-2009 232 5.3 - Planted areas by crop 1990-2009 233 5.4 - Value of Cultivated Crops in 1994 price 236 5.5 - Number of farms by activity in 2001 and 2009 240 5.6 - Value of Non-aquaculture livestock raising in 1994 price 240 5.7 - Aquaculture Value in 1994 Price 242 5.8 - Proportion of Agricultural Production (excluding fishery and forestry) 243 5.9 - Vietnam's land uses as of 1st January, 2009 245 vii 5.10 - Productivities of rice and maize1995-2009 266 6.1 - The structure of the national income 1975-1979 275 6.2 - Investment structure in industry 1955-1971 275 6.3 - GDP at constant 1994 price by economic sector 279 6.4 - GDP structure by economic sectors 279 6.5a - Industrial output in 1994 price by industrial subsector 280 6.5b - Industrial output in 1994 price of selected sub-sectors 281 6.5c - Structure of industrial output value at current prices by industrial activity 281 6.6 - Outputs of selected groups of manufacturing industries in 1994 price 283 6.7 - Exports of goods by Standard International Trade Classification (SITC) 284 6.8 - Value of total exports and some selected groups of exports 1995-2009 285 6.9 - Exports of higher-tech manufactured products 286 6.10
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