San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley


The Historical Origin
of the Vietnamese People

The Viet Under
the Chinese Empire

The Regions of Viet Nam

Viet Nam Under the French Empire

The Partition of Viet Nam

The Partition of Viet Nam

Comment of North Vietnam Officer Concerning
Why North Vietnam Won the War

Ongoing Problems

The Current Economy

Vietnamese Place Names

The Field Prize in Mathematics
for Ngô Bao Châu

The History of Viet Nam

The state that was the origin of Vietnamese political identity emerged in what is now northern Vietnam by about 200 B.C. The Kingdom of Au Lac was established about 210 B.C. and three years later when the Qin Empire fell and was replaced by the Han Empire, a Chinese Qin Empire general, Chao Tuo, took control of the region for himself. It was called by the Chinese Nam Viet, meaning South Viet, Viet being the Chinese generic term for the peoples to the south of the core region of China. Note on the map below that the area of Nam Viet included what is now South China and the linguistic area of Cantonese. There are some that believe there is a strong linguistic link between Vietnamese and Cantonese. Note also that the area which is now South Vietnam was not part of the original core region of the Vietnamese people.

The Vietnamese Under the Chinese Empire

Nam Viet was annexed by the Chinese Empire in 111 B.C. Fify years later there was a rebellion led by the Trung sisters afer the husband of one of the sisters was executed by the Chinese but the rebellion was crushed. (The area was known as Nam Viet and other names such as Dai Viet, Great Viet, until about 1800 when a Chinese Empire administrator reversed the words in the name to Viet Nam for no particular reason except to show that he could do so.) Nam Viet remained under Chinese control from 111 B.C. until 939 A.D. when the Chinese Empire armies were driven out of the north. Nam Viet remained independent until 1407 when China again attempted to rule it. This second occupation was short lived and a rebellion freed the country by 1428.

In Vietnamese sources the name of the country is still written as Viet Nam but in the West the two words of the name are combined into one, Vietnam.

The Regions of Viet Nam

The different regions of what is now Vietnam had a quite different character in ancient times. The central part was from the second century A.D. until the seventeenth century a Indonesian based kingdom called Champa. The south was from the first century A.D. to the sixth century part of the Funan Empire. Later this Mekong Delta region was occupied by the Khmers. It was not until the eighteenth century that the Vietnamese drove the Khmers out of the Mekong delta region. During this Vietnamese conquest of the Mekong delta region there was substantial population of Chinese immigrants brought in to aid the occupation of the territory.

Viet Nam Under the French Empire

By the time of the European scramble for empire in the late nineteenth century there were four kingdoms in the region of Indo-China; Annam, Tonkin, Laos and Cambodia. The region of what is now South Vietnam was in dispute between the Cambodians and the Vietnamese. In the period from 1400 to 1760 the Vietnamese were occupying and controlling the region of the Mekong Delta. In 1859 the French captured Saigon and secured by 1867 the acceptance of their control of the region from the Annamese (Vietnamese) of the north. The French designated this region Cochin China and administered it directly as a colony rather than through local rulers.

After the war between France and the Qing Empire of China in 1884-85 France assumed control over Annam and Tonkin. In 1887 these two were combined with Cambodia and Cochin China into a federation known as French Indo-China. Six years later, in 1893, Laos was annexed by French Indo-China. The French left the local rulers nominally in charge of their former possessions, but the real power was in the hands of the French territorial administrators.

Dien Bien Phu, 1954

When France conquered the Vietnamese in the north and the Khmers in the south and she promoted the further occupation and development of the Mekong Delta region by the Vietnamese. France added new ingredients to the cultural stew of Vietnam. The urban elite historically had adopted Chinese cultural institutions such as Confucianism, the Mandarin language and Chinese systems of administration. The rural Vietnamese population were much less affected by this Sinicization, but were influenced by the adoption of Buddhism from the Indianized cultural area of southeast Asia. The French added Catholicism and a writing system based upon Latin letters. The spelling used in this transliteration of Vietnamese surprisingly was Portuguese because the French relied upon a dictionary compiled earlier by a Portuguese cleric.

French control of Vietnam effectively ended with the Japanese invasion of Vietnam. The Viet Minh with Allied assistance fought the Japanese army. After the end of World War II the French were allowed to reoccupy Vietnam but the Viet Minh fought a successful guerilla war that ended in French defeat in 1954.

The defeat of the 13 thousand French troops at Dien Bien Phu was more in the nature of a tactical blunder on the part of the French rather than a successful campaign by the Viet Minh. The French feared a Viet Minh campaign into Laos and chose to occupy Dien Bien Phu by paratroops. The French military actually sought a major military confrontation in which they could defeat the Viet Minh with artillery and air power. They put their troops in a precariously vulnerable position that would be an irresistible opportunity to the Viet Minh. Clearly the military leadership overestimated the effectiveness of their weaponry and underestimated the military resourcefulness of their enemies. General Vo Nguyen Giap brought nearly fifty thousand troops to encircle the French position. This was comfortably more than the three to one ratio needed to defeat a defensive force.

The French occupation of Dien Bien Phu took place in November of 1953. The Viet Minh had all the time in the world to marshal their forces. The French were not going any where and the rigors of the isolated site would wear down the defenders. The Viet Minh attack came on March 13th.

Airfield at Dien Bien Phu

The French were counting on their forces being supplied through the air field at Dien Bien Phu, but that base was quickly captured by the Viet Minh. Thereafter the French planes had to make parachute drops of supplies but many of those fell into Viet Minh hands. Reenforcements could not be provided because paratroopers dropped at the site, even those dropped at night, were killed before they reached the ground.

After a 56 day siege the French force surrendered. The losses had been horrific on both sides. The French had four thousand killed but the losses for the Viet Minh were far greater, exceding eight thousand. Many of the French who surrendered died as prisoners of the Viet Minh.

With hindsight it was clearly a foolish move on the part of the French military to occupy and try to defend the base. The only possible outcome was their defeat; it was just a matter of how long it would take. Even worse for the French was their making this battle in an isolated area near the Laos border the show case of their battle with Viet Minh. They went from overconfidence to defeat in one battle to effective surrender in the whole country.

The Partition of Viet Nam

The peace treaty provided for the temporary division into what were colloquially called North Vietnam and South Vietnam. The South had a more prosperous economy without the Stalinist economic structure that stifled the North. But the North had the military power and used it to maintain a guerilla war in the South. Although the insurgents lost every major military engagement they convinced the world and the United States in particular that they would go on fighting forever despite casualty losses ten to twenty times those of their opponents. The Tet Offensive in 1968 was a military failure for North Vietnam and virtually wiped out the Viet Cong guerillas of the South but American media protrayed it as a victory or near-victory for the North. Convinced that the war would continue forever the U.S. withdrew its troops. The North Vietnamese Army then conquered the South with a full-scale military invasion.

In 1975 General Frederick C. Weyand told his North Vietnamese counterpart in negotiation in Hanoi preceding the fall of Saigon, "You know, you never beat us on the battlefield." The North Vietnamese official replied, "That is true, but it is irrelevant."

Viet Nam Under Stalinist Socialism

But prosperity did not come with peace. The Stalinist economic system the North had adopted stagnated the economy and by the mid-1980's the economy of Vietnam was devastated.

In the decade after the end of the Vietnam War in 1976 the economy deteriorated. Vietnam was not growing enough rice under collectivized agriculture to feed itself. In 1986 Vietnam had to import 1.5 million tons of rice and starvation conditions were prevalent. At that time the Vietnamese Communist Party announced an abandonment of its Stalinist central planning and collective agriculture and the adoption of a program of market socialism, called doi moi, restructuring. After ten years of moving away from the Stalinist model Vietnam had become the world's third largest exporter of rice. In 1995 Vietnam reported a growth rate of 9.5 percent.


Doi Moi, which literally means change and newness, is the Vietnamese Communist Party's term for reform and renovation in the economy. This term was coined in 1986 for a transition from the centrally planned Stalinist command economy to a "market economy with socialist direction," what is often referred to as market socialism. In contrast to Eastern European reforms Doi Moi favors gradualism and political stability over radical change, with economic restructuring to come before privatization. Vietnam was more like China in its economic structure than the Soviet Union or Eastern Europe. Furthermore, the role models for successful economic development in East Asia have not promoted political liberalization.

The idea of Doi Moi originated from seeing the negative results of suppressing some spontaneous war-time experiments. Thus it was that the VCP's Sixth National Congress in December of 1986 acknowledged that the economic model followed since 1954 had failed. In 1988 there were major policies initiated which moved the system toward a market economy. Some of these were:

These measures were not necessarily implemented but they were stated policy of the VCP. For example, a random sample of 32 state enterprises in 1990 found only five were operating in accordance with these policies. However, the cooperative and private sectors account for two thirds of the gross national income. Some of the reforms were necessitated by the changes in the Soviet Union. After years of covering 25 to 30 percent of its state budget with foreign aid, Vietnam, in 1991, had to make do with only five percent from this source.

Ongoing Problems of the 1990's

The Vietnamese Government has sought foreign investment and many foreign businesses are interested but the amount of actual investment has fallen short of the potential because of severe problems in Vietnam. These problems consist of an unwillingness of the Communist government to relinquish absolute political control. This means that there is an absence of the rule of law and foreign investors are at the mercy of party officials. This encourages corruption. Domestic small businesses are also at the mercy of party officials. By 2002 there were about fifty thousand of these but they are subject to as many as fifteen bureaucratic inspections each year.

There is also a generally low level of infrastructure. In principle all land was owned by the government and this made the acquisition of business sites difficult and uncertain. There are banks but about of their lending goes to state enterprises. However all is not lost; some of the recipients of these state-sanctioned loans channel the funds into a black market in capital.

The Current Economy

In the twentyfirst century some of Vietnam's problems are being solved. Between 1995 and 2004 Vietnam grew at a rate of about 7.5 percent per year and this rate is second only to that of China. This period included the years of the Asian financial crisis. It also included the period of the collapse of the Soviet Union and the decline in foreign from that source. The recent years look even better. Vietnam's foreign trade is on the order of $20 billion per year whereas its total foreign aid is only about $2 billion per year. In 2003 Vietnam took in foreign investment equal to 8 percent of its GDP. This is a higher proportion of foreign investment than China got.

Vietnam's trade with the U.S. is growing after a trade pact was agreed upon in 2002. However some elements of the trade is running into protectionist legislation in the U.S. The export of catfish to the U.S. from Vietnam was restricted by a high tariff invoked by U.S. catfish farmers. The textile industry in Vietnam received a quota for exports to the U.S. and the textile trade grew from $47 million in 2001 to $2.4 billion in 2003. However once the quota is filled the growth will thereafter be limited to a few percent per year.

Vietnamese Place Names

The Tourism Industry in Vietnam

Vietnam could well become one the top tourist destination for Americans in the next few years. Some of the most attractive beach hotel locations in the world have been or are being developed in places such as Nha Trang.

The Field Prize in Mathematics
for Ngô Bao Châu


For the economic histories of other countries click here.

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