Vietnam is one of the world's poorest countries, having suffered from years of war (1940-89) that damaged its economy and basic infrastructure . If any of you out there in cyberspace know of such research, please let me know. In the next year 2,500 government functionaries and other real and imagined enemies of the Viet Cong were assassinated. Professor Fischer had some interesting things to say about the Korean War: "In its economic impact the Korean War was similar to the world wars that had preceded it. The United States experienced an increase in the national debt as a result of the Vietnam War. It is still largely an agricultural economy, with 72 percent of its workforce engaged in that sector. larger pay for smaller tots forces, partly to attain th?? ?, willingness of the United States Government to use in essentially nonwar conditions direct controls over wages and prices. The Vietnam War was fought for civilians, by civilians and among civilians – and the majority of casualties were civilians. What can be said safely is that the end of the war will have very little direct dollar effect on the economy as a whole, now, but that it will make a bit easier the Administration's very serious effort to check the largely domestic‐caused juggernaut of Federal spending. Since the 1970s, Vietnam has slowly liberalized its economic system and recovered from decades of war. budget itself—but not main ly for expensive weapons. Inflation followed as the night the day. Independently of that, however, it put classic fiscal and monetary clamps on the economy. And the war as a whole at its end, measured by the Defense Department's definition of “incremental cost,” was costing about $6‐billion. In addition, Vietnam's economy was heavily depressed due to prolonged conflict at the border with China and the long-lasting setting footholds (over 10 years) in Cambodia after the Southwest border war. Without the winding down of the war it would have risen sharply for reasons of inflation alone. During the last half of 1959, VC-initiated ambushes and attacks on posts averaged well over 100 a month. Yet in economic terms the war leaves with a whisper, not a bang. Vietnam is a socialist country operating under the leadership of the Communist Party. Vietnam Since the War (1976-Present)The war in Vietnam finally ended in 1975, when North Vietnamese troops captured the South Vietnamese capital of Saigon. In the decade after the end of the Vietnam War in 1976 the economy deteriorated. They knew that the economy was about to bump up against its full‐employment ceiling, that inflation threatened and that a big budget deficit was the worst possible medicine. b. Once again, inflationary pressures surged throughout the world. In the 1980s. © 1996-2020 Historycentral. The U.S. had poured some $168 billion into the war, but the real cost of the conflict was its impact on the economy. The requirements of the war effort strained the nation's production capacities, leading to imbalances in the industrial sector. The President began to get a more accurate picture of the cost of the war by March. If the economy runs away again, for whatever reason, controls will be a lively possibility for any Government in power in the United States. Vietnam War - Vietnam War - The U.S. role grows: By the middle of 1960 it was apparent that the South Vietnamese army and security forces could not cope with the new threat. They also introduced a series of changes designed to transform Vietnam into a socialist society. WASHINGTON—The war in Vietnam produced what is widely recognized as the greatest blunder in Government economic policy since World War II … a. In addition, military expenditures, combined with domestic social spending, created budget deficits which fueled inflation. The President's economic advisers, then headed by Gardner Ackley, were increasingly suspicious of the Defense estimates. Interest rates rose, restricting the amount of capital available for businesses and consumers. The struggle for Vietnam was one of the 20th century’s great human tragedies. Vietnam's army overran neighboring Cambodia in 1978, driving the genocidal Khmer Rouge out of power. Depending still on details, the annual United States aid contribution — including our share of the roughly $2.5‐billion five‐year amount for North Vietnam contained within the over‐all figure of $7.5‐billion — is not likely to be a great deal larger than the amount of foreign aid that was being spent annually in South Vietnam anyway. The new budget for fiscal 1967 included $10‐billion for the war, though the final figure turned out to be $20‐billion, an error of 100 per cent. But the main legacy is probably domestic. But, in polling people like key members of Congress and businessmen on whether they would support higher taxes, he never really told them how much the war was costing and would cost. The funds were going overseas, which contributed to an imbalance in the balance of payments and a weak dollar, since no corresponding funds were returning to the country. Most of the country’s rail infrastructure, bridges, roads, and canals were destroyed. that total defense spending has remained remarkably stable in dollar terms for five years as the war woun?? In peaceful times, soldiers were sent home to do farm work. The beginning of the Botch came in December, 1965, with a gross underestimate of the cost of the war for the fiscal year 1967 (from mid‐1966 to mid‐1967) by the Defense Department under Robert S. McNamara. Until French colonization in the middle of the 19th century, the economy of Vietnam was mainly agrarian and village-oriented. It is to be hoped that, as in the current experiment, they would be imposed after and not before the more fundamental restraints have been applied. Socialist planned economy played dominant role in the economy. But they are very large relative to some of the recent domestic budget cuts—for example, about $200‐million for rural electrification loans—which have caused great Congressional protest. In December and January President Johnson declined their advice. Civilization in Vietnam had been built on agriculture. We could not have had zero inflation, but we need not have had anything like the 6 per cent inflation we final ly got. Land ownership was regulated, and such large-scale works as dykes were constructed in the Red River Deltato facilitate wet rice cultivation. While the economy after World War II was one of the most robust in American history, during and after Vietnam the nation was in a death spiral of stagflation and economic … Thus, economic development is the nation's highest priority. If he had asked for taxes to pay for the war, the response in Congress might have been to scuttle the domestic legislation instead. A Republican Administration took office in early 1969 at the peak of the inflationary boom. The Vietnam War had several affects on the United States. down, to the range of $75 billion to $77‐billion. Although Vietnam is officially a Communist nation, about 40 percent of the economy is capitalist, and the government is making great efforts to encourage private foreign investment. The billions that the United States spent eventually caused a recession. Estimates of the number of people killed in Indochina range from two and a half million to more than four million. Millions of acres of forest had been defoliated by the toxic Agent Orange. The result was the experiment in controls: an experiment sufficiently successful, or certainly not unsuccessful, to give a similar venture a far higher probability in the future than would ever have seemed likely five or 10 or 15 years ago. Furthermore, the court prohibited slaughtering water buffalo and cattle and held many agriculture-related ceremonies… Explore our complete time lines of major events in American history as well as World History. Economic Effects of the Vietnam War A common modern belief is that war leads to a positive outcome within the United States economy. According to this estimate, it will be 70% the size of the UK economy by 2040. Besides, the President that year had a lot of Great Society legislation pending in Congress. rate prior to the war. The Vietnam War had several effects on the U.S. economy. But officials continue to say that the “ball park” figure is $7.5‐billion, spread over five years, for all of Indochina, including contributions by others than the United States. As in foreign and military policy, something has been learned. In addition, the government's military spending caused several problems for the American economy. Vietnam War and the Economy. The funds were going overseas, which contributed to an imbalance in the balance of payments and a weak dollar, since no corresponding funds were returning to the country. Still, a lasting lesson is likely to have been learned. As Kemf puts it: "More forests have been lost in Vietnam since the US/Vietnam war ended in 1975 than during it. This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996. Before the US-Vietnam war (1959-1975), Vietnam had a highly centralized economy based on Marxist economic planning. Vietnam is one of the world's poorest countries, and since the end of the war population pressure and the effects of the US-led economic blockade have cruelly taxed the renewable resource base of the country. The war, and its economic handling, also played a part in the eventual collapse of the world monetary system established at Bretton Woods, N.H., a quarter of a century ago, though this might have happened anyway. Prices continued to climb." But insofar as economic analysis can judge and has judged, the answer is yes, the worst could have been easily avoided. The agonizing story is familiar. Whatever aspect of history you wish learn about, you will find it at Historycentral.com. The United States pays $22 billion a year in war compensations for Vietnam veterans and their families. Despite rising trade tensions and volatility in emerging economies throughout 2018, Vietnam’s economy saw broad-based growth and low inflation. But, whetter applied at the wrong time or the right time, controls are now part of our heritage and are not automatically viewed as an ogre. This in turn ultimately led to the devaluation of the dollar and the end of the Bretton Woods system. In any case, that was the great blunder —the failure to recommend higher taxes in early 1966. The Vietnam War had several effects on the U.S. economy. The blame was mainly that of President Johnson, and he finally realized it. After World War II, Korea and Vietnam, war-inflations were not followed by a decline at all. And Congress did not enact it until July, 1968. In good Dart because of its failure to finance the war, the United States Government let the economy run away in the late nineteen‐sixties. Vietnam economy grows nearly 7% on trade war tailwinds Manufacturing exodus from China propels one of fastest boosts in region Shipping containers are stacked at a port in Haiphong, northern Vietnam. Government spending and debt remained in check and bank capital rules were strengthened. Economic performance since 1986 has justified the policy of relaxation of central control, the challenge faced by Vietnam has been the maintenance of rapid economic growth and integration into the global economy. First, a brief recall of the Great Botch of 1966. Research our special sections on diverse subjects ranging from presidential elections to naval history. Re: Economic Causes of the Vietnam War As far as I know, nobody else has examined this topic, as I did in 1977 in the course of research for TWTWW. Though the plan exaggerated regional divisions, the development of exports--coal from the North, rice from the South—and the importation of French manufactured goods stimulated internal commerce. This war was largely funded by increases in tax rates, but also with an expansive monetary policy which then subsequently led to inflation. 2.0 Analysis of Vietnam’s Political. The Vietnam War damaged the U.S. economy severely. The President finally proposed a tax increase in January, 1967, asking that Congress not consider it until after mid‐year. But, even before they knew the worst, they had recommended a tax increase. American planes dropped seven million tons of ordnance – three times the amount they had dropped i… • The Vietnam War was unlike World War II and the Korean War, as it ramped up slowly with American troop deployments starting in 1965. While the “peace dividend” concept has always been a little ambiguous, it is clea?? The Government is silent pending consultation with other countries that may want to help. Occasionally the digitization process introduces transcription errors or other problems; we are continuing to work to improve these archived versions. Few consumer goods were being produced and this was affecting the American economy greatly. Vietnam has minimised the economic damage from Covid-19 and is the only country in South East Asia on track for growth this year. There is no present prospect of a massive postwar aid and reconstruction program in Indochina that will even equal the last, reduced cost of the war, even though there will be a significant program. The economy began the fourth quarter on a robust footing according to available data. All Rights Reserved. I has been spent on muc?? These numbers are small relative to the peak cost of the war, to the defense budget, to the total budget and above all to the total economy. The Vietnam War affected the US economy during the early 1970s by an increase the government's military spending, which caused several problems. On the other side of the ledger, there is almost no “peace dividend.”. In October, industrial production gained steam on a stronger manufacturing sector, while retail sales expanded notably and exports surged. While it is probably too much to say that Vietnam wrecked the old monetary system, it was one of the wreckers. The lesson, of course, is now commonplace. With the economy operating at full steam, the budget deficit began to zoom at exactly the wrong time, finally reaching $23‐billion in fiscal 1968. French colonizers, however, deliberately developed the regions differently, designating the South for agricultural production and the North for manufacturing. The stock market rose during the war. The North Vietnamese eventually won the war in 1975 and reunited Vietnam as a communist country. The war had “begun,” in the sense of the introduction of American combat troops in force, in Suly, 1965. Vietnam War (1954–75), conflict that pitted the communist government of North Vietnam and its allies in South Vietnam, the Viet Cong, against South Vietnam and its principal ally, the United States. The feudal dynasties always considered agriculture as the main economic base, and their economic thoughts have been predicated on physiocracy. Vietnam's economy after the war (1975-1986) After the war, the Northern and Southern Vietnam were unified as one state: the Socialist Republic of Vietnam. Hundreds of civilians died from unexploded landmines and bombs – many of the bombs lay hidden underwater in rice paddies. In doing this, Swanson is able to show how America continues to live with the consequences of the Vietnam War even today — and with the forces that led to U.S. involvement in the war. Another great aspect of the book is that it puts the Vietnam War into the context of the Cold War and the U.S. national-security state. The winding down was simply an aid in fiscal restraint and was not the “cause” of the subsequent recession, as some Republican politicians (including President Nixon) occasionally implied. goal of a volunteer army. The Stalinist economic system the North had adopted stagnated the economy and by the mid-1980's the economy of Vietnam was devastated. By coincidence, the economy at that time was approaching “full employment” after a long period of steady and noninflationary expansion, with idle resources of men and machines gradually decreasing. And they, partly as a result, expressed no enthusiasm for a tax increase. President Nixon first disclosed this figure in a message to Congress last February. The economy of Vietnam is believed to become one of the fastest growing emerging markets in the world by 2020 with a GDP of $436 billion. The classic restraint produced a recession and unemployment—a fairly mild recession but still deeper than anybody had planned — and yet inflation continued. The best present estimate is that the relatively small military savings from the ending of the war will be greater than the even smaller incremental aid costs to follow the end of the war. An even greater number were maimed, disfigured, orphaned, displaced or forced to flee as refugees. We shall never know for certain whether, had President Johnson proposed and Congress enacted a payfor‐the‐war tax increase of some $10‐billion in mid‐1966, the ensuing distress of the American economy could have been largely avoided. The requirements of the war effort strained the nation's production capacities, leading to imbalances in the industrial sector. Vietnam Economic Outlook. Which of the following best describes the effect of the Vietnam War on the US economy? These points stand out in the process of reflecting on the economic aspects of the long agony. Factories that would have been producing consumer goods were being used to make items from the military, causing controversy over the government's handling of economic policy. Basing on the current dollar value, the Vietnam War cost the equivalent of about $1 trillion. To preserve these articles as they originally appeared, The Times does not alter, edit or update them. Its economy is expected to grow 2.4% … Indeed, over the past decade, Vietnam has enjoyed one of the highest economic growth rates in the world. See the article in its original context from. Even the massive recent bombing of North Vietnam was costing “only” about $2‐billion at an annual rate. Shopping rates decreased and there weren't an goods for anyone to buy. He labeled it a "noble cause' and spent within the militar?? Just as important, inflation permitted to happen in the United States when the war was not paid for was important in eventually swinging the American trade balance — exports and imports — into massive deficit after years of regular surplus. The following year, the Communist leaders of North Vietnam reunited the two halves of the country to form the Socialist Republic of Vietnam (SRV). November 17, 2020. Then there is postwar aid in Indochina. The big money and the big strain are long since past. In 1978, Vietnamese government issued new currency of Vietnam Dong (VND), unified financial market of the North and the South. But, more than that, the war tended to sour the climate of international monetary negotiation, and it certainly did not help financial psychology. TimesMachine is an exclusive benefit for home delivery and digital subscribers. Of course, a better system may emerge from the wreckage. President Ronald Reagan sought to reinterpret the history of the war. The war was never big enough to clobber this nation's economy if properly financed. As Swanson points out, It began winding down the war rather soon. Vietnam's economy after the war (1975-1986) After the war, the Northern and Southern Vietnam were unified as one state: the Socialist Republic of Vietnam. Anti-war sentiments and dissatisfaction with government further eroded consumer confidence. WASHINGTON—The war in Vietnam produced what is widely recognized as the greatest blunder in Government economic policy since World War II — a blunder whose effects have still not been entirely eliminated. https://www.nytimes.com/1973/01/28/archives/what-vietnam-did-to-the-american-economy-worsening-payments-deficit.html. Current economic risks relate to geopolitics, trade policy uncertainty, and domestic reform implementation. On the international side, the war had a direct role in creating the massive deficit in the United States balance of payments. There is a whole book to be written about it. Massive government spending stimulated the economy. Vietnam War (1960–1975) CausesMilitary and Diplomatic CourseDomestic CoursePostwar ImpactChanging Interpretations Vietnam War (1960–75): Causes Most American wars have obvious starting points or precipitating causes: the Battles of Lexington and Concord in 1775, the capture of Fort Sumter in 1861, the attack on Pearl Harbor in 1941, and the North Korean invasion of South Korea in … After the war, Vietnam adopted a broad economic trend called 'Doi Moi' (Renovation) to recover from the ravages of the war, the loss of financial support from the Old Soviet Bloc. As for the “peace dividend,” as war spending has declined the dividend has almost entirely bee?? Despite this, the Vietnam War had a negative impact on the United States economy. It was part of a larger regional conflict as well as a manifestation of the Cold War. This had an even worse impact on the balance of payments. That has happened at other times and in other places. Mighthave‐beens are the bane of history. Everything is relative. Despite the success of many Kennedy and Johnson economic policies, the Vietnam War was a important factor in bringing down the American economy from the growth and affluence of the early 1960s to the economic crises of the 19, American history and world history can be found at historycental- History's home on the web. Finally, the war — or more precisely the aftermath of its poor economic handling — has left a major legacy: a new and probably lasting, though intermit? The economic consequences of the Vietnam War were among the major factors in creating the economic difficulties faced by the United States during the 1970s. Depending on one's philosophy, and the evolution of that philosophy over these trying years, it could even be a happy legacy from the long trauma of Vietnam. The war affected the production of goods and factories were producing things for the military instead of consumer goods. however. The first war really covered by photograph is the Civil War, but it is a small number of still photographs that have to be either studio posed or that take a long time to produce, whereas in the Vietnam War you get a proliferation of photographs from the field in a way you never have before. Because of post-war lumbering operations (the rebuilding of 10 million homes, schools, hospitals, roads and irrigation systems), the relentless collection of firewood, forest fires and centuries-… The Vietnam War left Vietnam in physical and economic ruins. Vietnam was not growing enough rice under collectivized agriculture to feed itself. Leading Industries Of Vietnam The economy of Vietnam is mainly reliant on foreign direct investments in order to promote growth. c. The billions that the United States spent devastated the US economy …