Development Policy Review

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  • Publication
    Vietnam Development Report 2010 : Modern Institutions
    (World Bank, 2009-12-04) World Bank
    Institutions are not buildings or organizations, they are the rules by which citizens, firms, and the state interact. The photographs that grace the cover of this Vietnam Development Report (VDR) 2010 epitomize modern institutions. The settings may not appear modern, but the activities they represent are cutting edge, and are transforming Vietnam. Local level planning with the active engagement of citizens. Monitoring of public works by citizens groups. Efficient administrative services with the citizen as the client. Legal advice being provided to citizens. Professional media coverage of important events. These are the roots which feed the growth of a modern, open, and high-performing society. This VDR focuses on devolution and accountability, two aspects of modern institutions that are the essence of Vietnam's experience in the past two decades. At the risk of over-simplifying, this VDR distinguishes between two types of accountability, upward accountability focusing on compliance with rules, dictates, and instructions coming from within the hierarchy, and downward accountability focusing on the results that the person or body is entrusted to deliver. A person or body concerned with upward accountability emphasizes adherence to rules. Those concerned with downward accountability serve their clients. Both forms of accountability are needed. Vietnam's devolution has shown many positive results. Competition among the provinces is driving them to improve their business environments. Eased entry for non-state providers of services and greater autonomy for the management of state facilities are supporting innovation and increasing the variety of services.
  • Publication
    Vietnam Business : Vietnam Development Report 2006
    (Washington, DC, 2005-11) World Bank
    Business development has been one of the main forces behind rapid poverty reduction in Vietnam. Together with the redistribution of agricultural land, and the broad coverage of social services, it allowed a large fraction of the population to engage in more productive occupations and raise their living standards. But businesses are still struggling with important constraints. Insufficient availability of finance, difficulties in accessing land and continuous gaps in infrastructure services (in spite of enormous investment efforts) are among the most important obstacles identified by entrepreneurs. In a booming labor market, retaining qualified personnel and finding the skills required to move up the ladder are also perceived as barriers to business development. As a result of these constraints, the domestic private sector remains dominated by small enterprises. In between a myriad household businesses and a few thousand large state-owned enterprises (SOES) and foreign companies, there are not many small and medium enterprises, and only a handful of domestic private firms have made it to the top. Sustaining business development in Vietnam requires the completion of the structural reform agenda. Fully developing the land market, restructuring the financial sector, managing state assets in a more efficient and transparent manner, mobilizing resources for infrastructure development, are the key priorities in this respect. Further integration with the world economy, especially through the accession to the World Trade Organization, is bound to lock-in some of these changes, and level the playing field between domestic and foreign enterprises. But there i s also a complementary reform agenda, aimed at leveling the playing field between the domestic private sector and SOEs and mobilizing capital (both public and private) in an efficient way. Global integration and domestic reforms are needed to sustain rapid economic growth while avoiding the accumulation of large contingent liabilities for the government. For Vietnam to become a middle-income country will entail going beyond structural reforms and laying the foundations of a modern market economy, introducing competition and proper regulation in infrastructure services, modernizing tax administration, reforming the legal and judiciary systems, reducing corruption, improving governance at local levels, are all part of a second generation of reforms that need to be put on track for Vietnam to move up to the next phase.