Review content
[1] Our Party's economic policy during the period 1976-1985.
[2] Economic policy and implementation results in the period 1976-1980.
[3] Economic policy and implementation results in the period 1981-1985.
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Discussion content
[1] Causes of the weaknesses of the Vietnamese economy before the renovation period.
[2] Experiences drawn from the period 1976-1985 for our country's economic development during the renovation period.
Chapter 7
ECONOMY IN 30 YEARS OF RENOVATION (1986 - 2016)
7.1. HISTORICAL BACKGROUND AND ECONOMIC STRATEGY
7.1.1. Historical context
Since the early 1980s, due to the global economic crisis, most countries have made economic adjustments or reforms at different levels and forms. In developed capitalist countries, the basic content of economic policy adjustments is to focus on developing industries with high scientific and technological content, and to regulate the economy mainly through macroeconomic tools and policies, especially fiscal policy. In developing countries, especially those in East Asia and Southeast Asia, economic reforms have been carried out and they have become dynamic development regions of the world.
In the socialist bloc, the Soviet Union, Eastern Europe and China have successively carried out economic reforms. Although reforms took place in these countries at different times and with different goals, they generally have the common goal of overcoming economic stagnation. The wave of economic reforms in the world has had a strong impact on Vietnam.
Also during this time, globalization is a prominent phenomenon and has become the main development trend of the world. Globalization requires countries to strengthen international economic integration. The trend of globalization and regionalization, along with the great achievements of the scientific and technological revolution and the knowledge economy, brings our country both opportunities and challenges in development.
In Vietnam, maintaining the centralized planning, bureaucracy and subsidy mechanism for too long has caused the economy to develop slowly and face many difficulties.
difficulties. To overcome that situation, in the late 1970s and the first half of the 1980s, our country had researches, experiments, and local innovations to overcome stagnation and move the economy up. However, these experimental and local improvements and innovations have not fundamentally changed the economic situation, and the socio-economic crisis is still severe. Therefore, comprehensive and fundamental innovation of the economy, along with innovations in other areas of the country, has become an urgent requirement for our country.
Responding to the practical requirements of the country, in December 1986, our Party held the 6th National Congress. With the spirit of "looking straight at the truth, correctly assessing the truth and clearly stating the truth", the Party decided to carry out comprehensive renovation, in which economic renovation was the central task of the renovation cause. The first step of special importance was the renovation of economic thinking. The fundamental and comprehensive renovation of economic thinking was raised from the 6th Congress and has been increasingly perfected through the congresses from 1986 to the present. Compared to previous periods, the policy on building and developing the country's economy has changed in quality.
7.1.2. Economic policy
7.1.2.1. General economic model
Our Party's perception of the general economic model is of key significance, deciding the country's development path. Before the renovation, the centrally planned economic model was applied throughout the period of building socialism in the North and nationwide in the years 1976-1985. The characteristic of this economic model is that it only recognizes the socialist public ownership of the means of production, expressed in two forms: the whole people and the collective. Corresponding to these two forms of ownership are two economic sectors: state-owned and collective.
At the 6th Congress (December 1986), a new economic model was proposed, expressed in the thinking about the market and the market mechanism. However, this issue was not clearly affirmed and was only identified as the development of a socialist commodity economy. At the 7th Congress (1991), the Party's guidelines identified "the initial formation of a commodity economy".
"multi-component, operating according to the market mechanism under the management of the State" [Party Documents, Complete Works, Vol. 51, 2007, 55]. At the 8th Congress (1996), our Party clearly identified that commodity production is not opposed to socialism, but is an achievement of human civilization, objectively existing, necessary for the construction of socialism. In this congress, the issue of socialist orientation was also clarified by the Communist Party of Vietnam in building a multi-component commodity economy.
The term "socialist-oriented market economy" was officially stated in the document of the 9th Congress (2001) with the content of "developing a multi-sector commodity economy operating according to the market mechanism, with State management in the direction of socialism" [Document of the 9th Congress, 2003, 86]. From here, our Party affirmed that the socialist-oriented market economy is the general economic model of the transition period to socialism in our country . After that, the 10th Congress (2006) and 11th Congress (2011) defined more clearly and fully the new economic model along with its operating mechanism and structure. The basic characteristics of the socialist-oriented market economy were defined more clearly in the 12th Congress (2016) of the Party. It is "an economy that operates fully and synchronously according to the laws of the market economy, while ensuring a socialist orientation appropriate to each stage of the country's development. It is a modern and internationally integrated economy; managed by a socialist rule-of-law state, led by the Communist Party of Vietnam, aiming at the goal of "a rich people, a strong country, democracy, fairness, and civilization." [Documents of the 12th National Congress, 2016, 102].
Also in the 12th Congress, our Party clearly affirmed the role of the market economy in four points: Fully and synchronously operating according to the laws of the market economy; the market plays a major role in allocating development resources; the market is the main driving force to liberate productive forces; strategies, planning, and plans are all consistent with the market mechanism. The socialist orientation of the market economy is reflected in five points: having the management of the socialist rule-of-law State; being led by the Communist Party of Vietnam; promoting the role of mastery.
of the people in socio-economic development; establishing appropriate progressive production relations to promote the strong development of productive forces and implement social progress and equity in each step and each development policy. The 12th Congress also set the goal of striving by 2020 to "basically complete and synchronously complete the system of socialist-oriented market economic institutions according to the common standards of a modern market economy and international integration" [Documents of the 12th Congress, 2016, 104].
Thus, from 1986 to now, our Party's awareness of the general economic model has become increasingly complete. Our Party affirms that the market economy is an inevitable development, suitable for our country in the new context. The socialist-oriented market economic model clearly defines the Party's goal of bringing the country towards "a rich people, a strong country, democracy, fairness, and civilization".
7.1.2.2. Economic management mechanism
Before the renovation, our country's economic management mechanism was a centralized, bureaucratic, subsidized planning management mechanism. The 6th Congress truly marked a fundamental, comprehensive, and profound turning point in the process of innovating the economic management mechanism. The Congress affirmed that innovating the economic management mechanism is to eliminate centralized bureaucracy and subsidies, to build a new mechanism in accordance with objective laws and the development level of the economy, and the essence of the new mechanism of economic management is "a planning mechanism according to the socialist business accounting method, in accordance with the principle of democratic centralism" [Party Documents, Complete Works, Vol. 47, 2006, 746]. The 6th Congress also pointed out principled issues in the process of innovating the economic management mechanism, namely: Implementing democratic centralism in economic renovation; innovating planning; making good use of economic levers; price policy; wage policy; In particular, financial and monetary policies became the focus of economic management mechanism innovation. However, at this congress, the thinking about the new economic management mechanism has not yet escaped the old thinking; it is shown in considering planning as the number one characteristic, while the correct use of commodity-money relations is only the second characteristic of the new mechanism.
In the following congresses (from the 7th to the 12th Congress), our Party continued to clarify the content and methods of innovating the economic management mechanism in the direction of eliminating the centralized bureaucratic subsidy mechanism, forming a market mechanism with state management, following the socialist orientation. This is essentially the process of innovating the State's economic management function; innovating macroeconomic management tools and synchronously establishing different types of markets. Specifically:
- Innovation of state management functions on economy
The State needs to focus on performing the following functions: Guiding development through strategies, planning, plans, mechanisms and policies on the basis of respecting market principles. Creating a favorable legal environment and mechanisms and policies to promote social resources for development, business entities to operate equally, compete fairly, openly and transparently... Supporting the development of important socio-economic infrastructure systems and social security systems. Ensuring the sustainability and positivity of macroeconomic balances, limiting risks and negative impacts of the market. Impacting the market mainly through mechanisms, policies and economic instruments... Implementing state management through the legal system, minimizing administrative intervention in market and business operations.
- Innovation of macroeconomic management tools
The innovation of planning work has been gradually improved in the direction of shifting from centralized planning of a direct legal nature to indirect planning. The State builds a system of macro targets, determines the growth rate, and proposes major policies and solutions to lead the economy in the direction of planning. The State needs to focus on building development strategies and plans, major programs and projects for the whole country, each region, and each field.
Innovate financial and monetary instruments towards building national financial policies and implementing fundamental financial reforms towards promoting the exploitation of natural potential and that of the people; continue to innovate tax policies towards encouraging production and investment.
Clearly define the functions of the State Bank and commercial banks, the budget and credit. Commercial banks truly shift to business, financial autonomy, and apply the form of joint-stock banks. Consistently implement the market price mechanism; ensure the correctness, completeness, publicity and transparency of price-forming factors for essential public goods and services; at the same time, have appropriate support policies for policy beneficiaries, the poor and ethnic minorities...
- Synchronously create market factors and market types
Continue to develop synchronously and operate smoothly all types of markets. Diversify the market of goods and services in a modern direction, focusing on forming a legal framework, developing a smooth and effective distribution system. Restructure the financial market , ensure the health and stability of the macro economy; ensure market principles for the financial market associated with strengthening management, inspection, control of the State and supervision of society; develop the debt trading market, the market of derivative instruments, and asset leasing. Continue to perfect the legal system, mechanisms, and policies so that the real estate market operates smoothly, in accordance with the law of supply and demand in order to exploit, use economically and effectively resources from land and assets, infrastructure on land... Perfect mechanisms and policies to develop synchronously and connect the labor market in terms of scale, quality of labor and occupational structure. Continue to innovate, strongly and synchronously develop the science and technology market , have support policies to encourage organizations and individuals, especially enterprises, to invest in research, development, technology transfer, and application of scientific and technological advances in production and business.
Thus, from 1986 to present (2016), the process of economic management mechanism innovation in our country has been taking place step by step in the direction of doing, testing, amending and supplementing. Economic management mechanism innovation has created new momentum for rapid economic growth. However, the completion of economic management policies and tools, and the improvement of the effectiveness of the state apparatus are still issues that need attention in our country today.
7.1.2.3. Economic structure
a. Restore and develop a multi-sector economy
During the renovation period, our Party has always affirmed the policy of developing a multi-sector economy. However, the perception of the components and their roles has changed in the direction of being increasingly perfected, reflecting closely the laws of motion of economic theory and practice in our country.
In the 6th Congress, our Party pointed out 5 economic sectors existing in the transition period to socialism in our country. These are: socialist economy; small-scale commodity production economy; private capitalist economy; state capitalist economy in many forms, the highest form of which is public-private joint venture; natural, self-sufficient, and self-sufficient economy in a part of ethnic minorities. This viewpoint continued to be affirmed through congresses from 1986 to the present; but there were certain changes in the number and names of economic sectors. Inheriting the spirit of the 6th Congress, the 7th Congress determined that our country's economy consists of the following sectors: state-owned, collective, individual, private and state capitalist economies. The 8th Congress continued to affirm the multi-sector economy: state economy; cooperatives; state capitalism; individual, smallholder and private capitalism. At the 9th Congress, it continued to affirm the existence of the following components: state economy; collective economy; individual, smallholder; private capital; state capital and foreign-invested economy. The 10th Congress affirmed that our country's economy consists of 5 components, namely: state economy, collective economy, private economy, state capitalist economy and foreign-invested economy. The 11th Congress documents mentioned 4 components, namely: state economy, collective economy, private economy and foreign-invested economy. At the 12th Congress, it did not mention specific economic components, but only continued to affirm that our country has many economic components; at the same time, it clearly stated: "the state economy plays a leading role, the private economy is an important driving force of the economy" [Documents of the 12th Congress, 2016, 103].
Thus, since the 6th Congress, our Party has decided to restore, build and develop a multi-sector economy. This is a fundamental and qualitative innovation of our country's economy during the transition period to socialism.