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9 - Concluding Remarks
- from Section III - Conclusion
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- By Ng Chee Yuen, Visiting Senior Fellow, Centre for Management of Technology, National University of Singapore, Singapore, Nick J. Freeman, Head, Indochina Research ING Baring International, Bangkok, Frank Hiep Huynh, Senior Lecturer, School of Economics, LaTrobe University, Melbourne
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- Book:
- State-Owned Enterprise Reform in Vietnam
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 09 November 2017
- Print publication:
- 01 November 1996, pp 153-164
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Summary
The State as Development Agent
Although Vietnam now recognizes the utility of a state-regulated market economy, and the desirability of a multi-sectoral economy (that is both private and state enterprises), the complete abandonment of state-owned enterprises (SOEs) is not deemed acceptable. Indeed, Vietnam wishes to see the state sector maintain its position at the forefront of the economy. One general conviction prevailing, and categorically stated in two of the chapters on Vietnam (Tiem and Thanh, Tuan et al.), is the view that the state plays a pivotal role as a development agent; and that the provision of certain goods and services shall remain in the exclusive domain of the state. The areas listed range from public utilities, infrastructure, defence, security, transport, postal services, and telecommunications to fertilizers, pesticides, veterinary products, and geological prospecting.
Three basic reasons have been given for an active state role: (1) low or non-profitability in the provision of (often capital-intensive) public utilities and infrastructure; (2) the need to help develop remote and mountainous areas; and (3) the need for industries necessary for Vietnam's industrialization and modernization, which the private sector is unable, at present, to play an important role in promoting. The literature on the establishment of SOEs, however, cites many more reasons, pertaining to factors such as macroeconomic stabilization, just and fair distribution of income and wealth, market failures and imperfections, monopolistic market structures, and externalities (see for example, C.Y. Ng and N. Wagner, Marketization in ASEAN. Singapore: ISEAS, 1991).
Indeed, the ASEAN experience has shown a strong case for the state to play a pivotal role in development, through the establishment of SOEs. It should, however, be noted that all ASEAN countries are currently undergoing dramatic transformation, through divestment of SOEs, having experienced a serious drain on their budgets in the recent past. The one possible exception where SOEs have been (in general) profitably and efficiently run is Singapore, and yet this state too has a comprehensive programme of privatization.
1 - Introduction: Marketization of Public Enterprises
- from PART ONE
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- By Ng Chee Yuen, Fellow at the Institute of Southeast Asian Studies, Norbert Wagner, Fellow at the Institute of Southeast Asian Studies, and Representative of the Konrad Adenauer Foundation
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- Book:
- Marketization in ASEAN
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 10 November 2017
- Print publication:
- 01 January 1991, pp 3-8
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Summary
The year 1989 probably marked the culmination of a period of significant changes in perceptions of the role of the state. The revolutionary changes and upheavals in the Communist world and the concomitant crumbling of many (communist or non-communist) dictatorial regimes in Europe and in Asia are unmistakable indications that these states have simply not delivered the goods, material and immaterial, which were promised. The romantic idea of creating a “new” or “socialist” man has proved to be a complete failure. After decades of experimentation and repeated promises, disillusionment is spreading.
It is not only in (formerly) socialist countries with their strong tradition of centralized decision making, and government interference and involvement in the economy that the role of the state in general, and of the government in particular, as an agent of political and economic development is being increasingly questioned and disputed. In fact, it can be argued that the movement for less government interference and more individual decision making originated in the late 1970s and early 1980s within the industrialized countries with already more or less open societies and economies.
Interventionist policies, restrictive regulations, and state involvement in economic activity in the industrialized countries failed to achieve low unemployment, low inflation and high economic growth when external shocks were felt in the 1970s and 1980s. Quite to the contrary, interventionism and state involvement hampered structural adjustment and, thus, made the unavoidable changes even more painful in the long run.
Whilst these observations and interpretations are valid generally and few would arguably dispute them, there must, however, be some logic and reasons behind the state's greater involvement in the production of goods and services in particular, and its interference in the economy in general earlier on.
Traditionally there have been various rationale and objectives for the state's involvement in the economy: one rationale and objective is related to macroeconomic stabilization and the realization of a certain level of economic growth. Another important rationale and objective is to achieve a, by whatever definition, “fair and just” distribution of income and/or wealth among the various socio-economic groups of society. The third major objective of economic policy making is to secure the efficient use and allocation of scarce resources. In addition, the state is often expected to play an important role as an agent of development.