Vietnam, previously one of the poorest countries in the world, is developing into an economic success story. The wars Vietnam partook in ended in destruction with many areas of Vietnam’s normal life style was destroyed. Vietnam’s war-infested economy needed to be fixed with the fundamental base reworked and renovated. In 1986, the government launched a new economic renovation (Doi Moi). The economy grew at a steady average annual rate. The new economic reform transitioned Vietnam’s government toward a positive socio-economic development, along with an improved diplomatic and political status (Vuong). The Doi Moi transition brought along Vietnam’s newly introduced “macroeconomic performance” (Vietnam - Overview of economy”) which aided in Vietnam’s
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Long-run economic growth would be hard to achieve without stock markets, bond markets, and banks (Krugman 301). Therefore, a newly opened stock market is able to affect GDP by influencing expectations about stock price (Krugman 302). An example of expectation influencing the stock market and consequently GDP, would be the investors who consider stock markets as ‘money machines’ and “herd mentality triggered huge market bubble risks” (Vunog). In the beginning, Vietnam’s stock market accounted for less than 1% of GDP but the number grew to 22.7% by the end of 2006 (Vuong). As Vietnam’s stock market progresses and reduces strict foreign ownerships, it will be eligible to be ranked by MSCI (Morgan Stanley Capital International Indexes) as an “emerging market” rather than “frontier market” (Fritz). The Doi Moi reform led to growing and booming markets and along with the contribution toward reducing the poverty rate. Before the reform, Vietnam’s main source of income was not enough to feed the growing population (Glewwe). Since the reform, Vietnam is able to interact and trade internationally which results in economic growth able to diminish poverty. Vietnam has reduced its poverty rate from 28.9% in 2002, to 18.1% in 2004, 15.5% in 2006, to 4.5% in 2012 (Vunog). Graphs have shown a negative poverty trend in Vietnam since 1993 at the earliest (Le
Long-run economic growth would be hard to achieve without stock markets, bond markets, and banks (Krugman 301). Therefore, a newly opened stock market is able to affect GDP by influencing expectations about stock price (Krugman 302). An example of expectation influencing the stock market and consequently GDP, would be the investors who consider stock markets as ‘money machines’ and “herd mentality triggered huge market bubble risks” (Vunog). In the beginning, Vietnam’s stock market accounted for less than 1% of GDP but the number grew to 22.7% by the end of 2006 (Vuong). As Vietnam’s stock market progresses and reduces strict foreign ownerships, it will be eligible to be ranked by MSCI (Morgan Stanley Capital International Indexes) as an “emerging market” rather than “frontier market” (Fritz). The Doi Moi reform led to growing and booming markets and along with the contribution toward reducing the poverty rate. Before the reform, Vietnam’s main source of income was not enough to feed the growing population (Glewwe). Since the reform, Vietnam is able to interact and trade internationally which results in economic growth able to diminish poverty. Vietnam has reduced its poverty rate from 28.9% in 2002, to 18.1% in 2004, 15.5% in 2006, to 4.5% in 2012 (Vunog). Graphs have shown a negative poverty trend in Vietnam since 1993 at the earliest (Le