South Vietnam - Economy

Economy

South Vietnam maintained a free-market economy and ties to the west. It established an airline under Head of State Bảo Đại named Air Vietnam. The economy was greatly assisted by American aid and the presence of large numbers of Americans in the country between 1961 and 1973. Electrical production increased fourteen-fold between 1954 and 1973 while industrial output increase by an average of 6.9 percent annually. During the same period, rice output increased by 203 percent and the number of students in university increased from 2,000 to 90,000. U.S. aid peaked at $2.3 billion in 1973, but dropped to $1.1 billion in 1974. Inflation rose to 200 percent as the country suffered economic shock due the decrease of American aid as well as the oil price shock of October 1973. The unification of Vietnam in 1976 led to the imposition of North Vietnam's centrally planned economy into the South. The country made no significant economic progress for the next twenty years. After the break-up of the Soviet Union and the end of Soviet aid, the leadership of Vietnam accepted the need for change. Their occupation armies were withdrawn from Laos and Cambodia. Afterward, the country introduced economic reforms that created a market economy in the mid 1990s. The government remains a collective dictatorship under the close control of the Communist Party.