The Political Economy of Growth in Vietnam: Between States and Markets, by Guanie Lim.

• Author: Tho, Tran Van

The Political Economy of Growth in Vietnam: Between States and Markets, by Guanie Lim. New York: Routledge, 2021. Pp. 97.

Ever since the economic reforms of 1986 (Doi Mod), Vietnam has been transitioning from being a planned economy to a market economy. Until 2019, right before the COVID-19 pandemic struck, this transition had yielded positive results. Along with the structural transformation from an agrarian society to an economy characterized by growing industrialization and a modern services sectors, the country's average annual growth rate had reached as high as 6.5 per cent. Another noteworthy facet of Vietnam's development is the growing importance of foreign direct investment (FDI).

This book, as its title suggests, attempts to provide a closer look at the above-mentioned description by focusing on the role of the state in Vietnam's economic transition and overall development. The author employs a comparative analysis approach, comparing: first, two key industries of Vietnam; and then, Vietnam with early industrializers of East Asia. In addition to a general discussion on the transformation of the economy, the book sheds light on the role of the state, particularly underlining the manner in which it interacts and negotiates with transnational corporations (TNCs) to promote the development of the nation's motorcycle and banking industries.

On the relationship between state policy and the behaviour of TNCs, the author borrows the framework developed by Liu and Dicken (2006), which is conceptualized by two aspects--active embeddedness and obligated embeddedness. In the former, TNCs have stronger bargaining power, whereas in the latter, it is the state that enjoys more bargaining power. In the case of active embeddedness, local assets such as a large domestic market and a cheap labour pool are widely available to TNCs. On the contrary, obligated embeddedness takes place when TNCs are forced to comply with state-set criteria in order to access desired assets. While the conceptual framework is very interesting, its application to the two case studies of Vietnam is not clear. Yes, Vietnam does indeed have a large, populous domestic market and a cheap labour force, as noted by the author, but these assets are widely available to TNCs and are not really controlled by the state. However, according to Lim, obligated embeddedness is the case in Vietnam. He emphasizes that, due to Vietnam's weak state structure, the country has benefited only...