Anatomy of FDI Failure: Foreign Direct
Investment and the Sino-Vietnamese
Experience of Total War
Eric Wilson*
This article challenges fashionable assumptions as to the universal applicability of
economic rationalism and free market legal reforms. The author argues that Vietnam’s
historical legacy of national liberation has given rise to a uniquely Vietnamese juro-
political ideological regime – Nha nuoc phap quyen. This, somewhat paradoxically,
simultaneously causes the ‘failure’ of FDI reform by First World standards, while
providing the post-colonial Vietnamese regime with its own internal yardstick for
measuring ‘success’ – namely, the thwarting of further perceived attempts by foreigners to
deprive Vietnam of national sovereignty.
I. Introduction: Vietnam and Post-War Economic
Development
Eleven years after withdrawing its forces from Cambodia, the People’s
Republic of Vietnam remains one of the world’s two or three least
developed economies, with a per capita income (1999) of US$376 (UNDP,
2001). During the 1980s, Vietnam’s war-generated command economy
had reached a near total breakdown. Between 1985 to 1988, hyper-
inflation had increased to 700 per cent and unemployment was close to
50 per cent of the industrial workforce. Further, in 1988 alone, 3 million
Vietnamese were near starvation, 5 million were malnourished, and
more than 2 million had emigrated (Neilson, 1998: 4). In the face
of unprecedented economic catastrophe, the Communist Party
(CPV) formally declared that economic development had replaced the
traditional goal of political sovereignty as the overriding national
objective (Gillespie, 1997: 367). As a result, the Party’s legitimacy
became dependent on its capacity to guarantee economic growth
(Neilson, 1998: 2). This national policy re-orientation marked a dramatic
shift for the CPV, which historically had always legitimised itself on its
successful ability to wage, and win, military struggle (EAAU, 1997: 17;
Turley, 1993a: 1).
Nevertheless, the historical memory of the national war experience
continued to exert a great and powerful influence on the course of
Anatomy of FDI Failure: Foreign Direct
Investment and the Sino-Vietnamese
Experience of Total War
Eric Wilson*
This article challenges fashionable assumptions as to the universal applicability of
economic rationalism and free market legal reforms. The author argues that Vietnam’s
historical legacy of national liberation has given rise to a uniquely Vietnamese juro-
political ideological regime – Nha nuoc phap quyen. This, somewhat paradoxically,
simultaneously causes the ‘failure’ of FDI reform by First World standards, while
providing the post-colonial Vietnamese regime with its own internal yardstick for
measuring ‘success’ – namely, the thwarting of further perceived attempts by foreigners to
deprive Vietnam of national sovereignty.
I. Introduction: Vietnam and Post-War Economic
Development
Eleven years after withdrawing its forces from Cambodia, the People’s
Republic of Vietnam remains one of the world’s two or three least
developed economies, with a per capita income (1999) of US$376 (UNDP,
2001). During the 1980s, Vietnam’s war-generated command economy
had reached a near total breakdown. Between 1985 to 1988, hyper-
inflation had increased to 700 per cent and unemployment was close to
50 per cent of the industrial workforce. Further, in 1988 alone, 3 million
Vietnamese were near starvation, 5 million were malnourished, and
more than 2 million had emigrated (Neilson, 1998: 4). In the face
of unprecedented economic catastrophe, the Communist Party
(CPV) formally declared that economic development had replaced the
traditional goal of political sovereignty as the overriding national
objective (Gillespie, 1997: 367). As a result, the Party’s legitimacy
became dependent on its capacity to guarantee economic growth
(Neilson, 1998: 2). This national policy re-orientation marked a dramatic
shift for the CPV, which historically had always legitimised itself on its
successful ability to wage, and win, military struggle (EAAU, 1997: 17;
Turley, 1993a: 1).
Nevertheless, the historical memory of the national war experience
continued to exert a great and powerful influence on the course of