The Vietnamese Economy: 1977-1985

Deepening Crisis, 1977-1980

Vietnam received considerable aid from the Soviets as a result of their alliance.

This should be tempered by two facts:

(1) Vietnam was suffering from considerable food shortages resulting from bad harvests and from the disincentives of the collectivization system
(2) Soviet aid mostly supported Vietnam's military activities in Cambodia; between 1979-1983, Vietnam received from $1.0 billion and $1.5 billion dollars in Soviet aid; this supported an army of over one million; Vietnam was required to repay part of this with raw materials and part thorough "guest workers" sent to the Soviet Union

Even without the difficulties of 1977-1979, the Vietnamese economy would have suffered from the combination of communist economic planning and bad harvests

But the Cambodian and Chinese conflicts, along with the forced deportation of hundreds of thousands of Vietnamese, made a bad situation far worse:

1) The United States continued its embargo
2) Vietnam was isolated from most of the non-communist world, meaning that much of the hoped-for aid and investment never came

By the early 1980's a genuine economic crisis had developed, with production shortages and extreme dependency on the Soviets

Virtually all of Vietnam's needs for fuel, communications equipment, military equipment, fertilizers, and metallurgical products came from the Soviets

Aside from coal, Vietnam had almost no exports and it was running a massive trade deficit
Its economy was increasingly linked to the Soviet-Eastern European trading system, which was mostly based on barter
Severe food shortages still plagued the country