The Network-Based Economy in Vietnam: Business Networks in Context and Over Time

After two decades of comparably high growth post-1990, Vietnam has entered a declining phase which would virtually nullify all the previous achievements and end the promise to transform Vietnam into an industrialized country by 2020. The "ideology versus reality" dilemma is held as a main obstacle to moving toward a more qualitative and sustainable development phase. This is because the government continues to insist on building "a market economy with socialist orientation." In fact, the "socialist" model of development, typically of a state capitalist or network-based economy, favors state-owned enterprises as the "pillars" of the economy, which drains resources and limits the private sector. Instead, it has created and nurtured a breeding ground for corruption, cronyism, favoritism, and nepotism that leaves little room for private innovation, efficient production, and effective management, so that products can compete and grow sustainably in international markets. In the final analysis, what Vietnam really needs to become more sustainable is a development-oriented market economy and a public administration for development. Furthermore, a check-and-balance mechanism is needed to allow the participation of a more active civil society to counter the excessive abuse of power brought about by the corrupted network that has caused severe threats to the economic sustainability of the country.