Economic paths of Argentina and Vietnam
In the 1990s, like Russia, Argentina and Vietnam decided to rethink their approaches to the economy. While Argentina embarked on the path of ultra-market reforms, Vietnam decided to retain its socialist system, adding a market component to it. The results of this policy can already be seen today – Argentina, which had hoped for Western help, found itself in a looser position than Vietnam. Without denying the benefits of the market, Hanoi maintained state support for industry and refused to blindly copy Western practices.
Argentina in the 1990s: unsuccessful attempts to apply Western methods
Up until the early 1980s, Argentina was considered one of the most economically promising countries. During this time, the country's leadership – both military dictatorships and democratically elected leaders – tried to implement economic reforms, but they were unsuccessful. The Argentine government rushed from one extreme to another, experimenting with both socialism (import substitution in industry) and free market (reduced price regulation), which led to the situation at the beginning of the 1990s in Argentina being described as ‘socialism without a plan, capitalism without a market’.
A new attempt to breathe life into the stagnant economy came in the 1990s. At that time, the pro-market President Carlos Menem, who before coming to power had put forward purely populist slogans, came to power. Nevertheless, once in office, Menem turned out to be a staunch supporter of the free market, an adherent of the Chicago School of Economics and radical neoliberalism. Under his leadership, Argentina followed the path of maximum favouring of foreign capital, strict monetary policy and pegging the peso – the national currency of Argentina - to the US dollar.
The early results of these policies seemed to confirm the unqualified rightness of free market advocates: incomes began to rise by the mid-1990s and inflation fell. However, as early as 1998, Argentina faced a financial crisis that resulted in a default, which was declared by the government in 2002. During this time, large capital fled the country, the national debt reached astronomical proportions, and ordinary citizens faced devaluation of income and mass unemployment. Since then, this period in the country's history has been characterised as the ‘lost decade’. By the early 2020s, a new term was already being applied to Argentina – the ‘lost decade’ – as none of the subsequent governments had been able to implement any of the necessary economic reforms.
If we compare the economic situation in Argentina in the 1990s with the Russian one for the same period, we can identify the following similarities. Firstly, the most important parameter is, one could say, the total transition to the implementation of the postulates of neoliberalism prescribed by the radical supporters of the market (the so-called Chicago School). Both states, in an attempt to obtain foreign aid and investment, carried out massive cuts in the social sector and almost completely lifted restrictions on capital movements. These measures essentially established the dollar as a quasi-national currency in both Argentina and Russia. Interestingly, the result of these economic transformations is largely identical: both countries underwent the largest defaults in their history: Russia's in 1998 and Argentina's four years later.
Second, the economic policies of both Argentina and Russia were characterised by a lack of consistency, reliance mainly on Western ‘advisors’ and specialists, and, moreover, neglect of the interests of the majority of the population, who needed social guarantees. In both countries, the economic reforms of the 1990s caused mass impoverishment of the country's citizens. Another consequence of such reforms was a major property and social stratification between the richest (the 1-5 per cent who benefited from market reforms, representatives of big businesses working for export) and the poorest, and at the same time the erosion of the once solid middle class. It is worth noting that, unlike Argentina, Russia's economy began to revive in the early 2000s: it was saved by rising hydrocarbon prices, which allowed it to restart its economy and grow GDP by up to 6% per year.
Vietnam: successful attempts to find a balance between free market and socialism
In 1986, Vietnam launched a campaign of political and economic renewal (Doi Moi), which introduced reforms to ease the transition from a centrally planned economy to market socialism. Doi Moi combined economic planning but also encouraged private enterprise and foreign investment.
By the late 1980s, these measures had revitalised the economy, but the sudden collapse of the communist regime in Eastern Europe and the disintegration of the Soviet Union left Vietnam completely isolated. For this reason, in addition to domestic reforms, the country had to make efforts on the foreign policy front, most notably to mend relations with China and the United States.
Previously, Vietnam's relations were complicated by the aftermath of the Vietnam War (this applies mainly to the US) and the close ties between Vietnam and the USSR, which China was unhappy about. Until the early 1990s, Vietnam was part of the USSR's zone of influence, which prevented Vietnam from benefiting from foreign investment from Western countries, as China has done since the 1980s.
The return of peace and stability to the region allowed Vietnam to focus on economic reforms initiated in the late 1980s. The government took a pragmatic approach reconciling socialism and capitalism, and actively borrowed from the successful experiences of countries that had moved, as Lee Kuan Yew put it, ‘from the third world to the first’ (Singapore, Japan, South Korea). At the same time, despite the market-oriented nature of Vietnam's economic reforms, the country's leadership did not abandon the socialist component of the economy and was negatively disposed to the radical breakdown of the former economic structure.
The main components of the reforms were aimed at liberalising the market and attracting foreign investment. In the early 1990s, the Vietnamese government approved a law on foreign investment and abolished Soviet-influenced collectivisation in agriculture. The government also abandoned fixed prices and subsidies and debureaucratised the state apparatus.
The results of the Vietnamese leadership's efforts were generally favourable. Per capita production of staple foods after half a century of decline increased so much that in 1989 Vietnam became a major exporter of rice. Job creation in the private sector offset job losses in the public sector. Foreign investment fuelled growth in crude oil production, light industry and tourism. Vietnam also shifted its trade in a remarkably short period of time from former communist countries to new partners, namely Hong Kong, Singapore, South Korea, Taiwan and Japan.
Drawing parallels between Vietnam and Russia in the 1990s, one can clearly see how the rejection of radical transformation in an attempt to gain recognition in the West can bring sustainable results. Unlike Russia, which embarked on the path of neoliberalism in the 1990s and broke with the Soviet past, the Vietnamese leadership decided to proceed more cautiously. Rather, it has followed the development path of its successful neighbours, who also introduced Western reforms, but refused to rebuild their way of life and their entire economy according to Western neoliberal postulates.
For example, both Vietnam, South Korea and Japan have retained state support for industry, allocating subsidies for the development of promising industries such as microelectronics and machine tools. In addition to this, it is important to note that Vietnam's market reforms took care of people who might have lost out as a result of their implementation: firstly, they could find new jobs as economic growth created new jobs, and secondly, many retraining and retooling programmes were created.
Prospects for Vietnam and Argentina in the second half of the 2020s
Both Argentina and Vietnam approach 2025 in a different state from each other, but both countries have a chance to improve their situation. The radical reforms of Javier Milei, a staunch libertarian, have already made many experts think back to the 1990s. The fact is that the policy of J. Milei is in many respects neoliberalism, given the completely pro-Western, if more precisely pro-American, orientation of the new president of Argentina.
When comparing the current economic situation in Argentina and Vietnam with Russia in the 1990s, Argentina is obviously more similar to the Russia of that time. Its government is pursuing the most neo-liberal course possible – tight monetary policy, cutting social programmes and at the same time providing privileges and subsidies to big banking and financial capital. Argentina is also similar to Russia in the 1990s in terms of the falling living standards of the middle class. The only sector of the economy that remains afloat is agriculture, but this is more the result of the country's favourable geographical location than government support.
Unlike Argentina, Vietnam is developing as a major industrial producer. There are many enterprises with foreign capital operating in the country (Apple, Google, Alphabet, Phillips, Samsung, LG, etc.), which are attracted by favourable business conditions and guarantees of ownership rights to foreign investors. It can be said that Vietnam now has subdivisions, factories and subsidiaries of almost all major companies in the world.
Overall, Argentina could be helped by the arrival of Donald Trump in January 2025. The new president is likely to help Argentina, which is now the most pro-American country in South America. The other thing is that this assistance, as well as austerity on social policy, will benefit only the most affluent segments of the population, while the overall standard of living is unlikely to rise under a policy of austerity on education, health care and infrastructure - important components of long-term and more equitable economic growth.
Vietnam has a significant chance of becoming one of the most developed economies in Southeast Asia. Here, the tense situation in U.S.-China relations plays most of all into the country's hands. In an effort to limit the potential of the Chinese economy, American and European businessmen, in addition to India, are betting on Vietnam as a large industrial site with a skilled and relatively inexpensive labour force. Vietnam, in turn, is investing in advanced industries, IT and modern infrastructure to lay the groundwork for further investment inflows and create high-value jobs for skilled labour.
When comparing Vietnam to Argentina, the Vietnamese strategy appears to be more visionary and sustainable. While Milei is effectively relying on US aid and support for the wealthiest segments of the population, essentially abandoning attempts to improve life for the majority of citizens, Vietnam is pursuing a pragmatic course. It co-operates with both the Global North and Global South, does not introduce radical economic reforms (the effects of which are highly questionable), and instead tries to become a regional leader through long-term economic growth, investment and training of skilled labour.
