During the centuries of Chinese and Vietnamese imperial rule, Vietnam’s society was predominantly agrarian. Its major source of wealth was rice. Although some manufacturing and trade existed, they received little official encouragement and occupied minor segments of the gross domestic product (GDP). Under French colonial rule, agriculture continued to occupy the primary place in the national economy, although emphasis shifted to the cultivation of export crops. In addition to rice, these crops included coffee, tea, rubber, and other tropical products. Small industrial and commercial sectors developed, notably in the major cities, but their growth was limited because colonial officials were determined to avoid competition with goods produced in France.
Vietnam's greatest economic resource is its literate and energetic population. Its long coastline provides excellent harbours, access to marine resources, and many attractive beaches and areas of scenic beauty that are well suited to the development of tourism; a lack of infrastructure, however, has inhibited full utilization of these assets. The actual potential for economic growth based on Vietnam's wealth of natural resources, however, is being rendered increasingly problematic by population growth, environmental degradation, and rising domestic demand, and the country remains one of the poorest in the world.
Vietnam is a poor, densely populated country that has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally planned economy. Substantial progress was achieved from 1986 to 1996 in moving forward from an extremely low starting point - growth averaged around 9% per year from 1993 to 1997. The 1997 Asian financial crisis highlighted the problems existing in the Vietnamese economy but, rather than prompting reform, reaffirmed the government's belief that shifting to a market oriented economy leads to disaster. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999. Growth continued at the moderately strong level of 5.5%, a level that should be matched in 2001. These numbers mask some major difficulties in economic performance. Many domestic industries, including coal, cement, steel, and paper, have reported large stockpiles of inventory and tough competition from more efficient foreign producers; this problem apparently eased in 2000. Foreign direct investment fell dramatically, from $8.3 billion in 1996 to about $1.6 billion in 1999. Meanwhile, Vietnamese authorities have moved slowly in implementing the structural reforms needed to revitalize the economy and produce more competitive, export-driven industries.
