Bangladesh and Vietnam Econ.

11.29, 2018

IMF reaction

“Crong capitalism”

Industrial Planning

Lack of transparency

Lax Supervision

Conditions

decrease G, increase Taxes —balance budget

eliminate price controls /subsides

end limits on FDI

+foreign ownership of banks +other firms

close bankrupt firms

run BoP surpluses to repay debt

raise i

“Frontier economies”

Bangladesh & Vietnam

Bangladesh

1971—Independence from Pakistan

Densely populated -150m

military rule—ISI policies —corruption

1990—IMF loans

wanted open economy

1991—Islamic state

since early 2000s

6% GDP increase

4% per capital increase

3/4 rural / agricolture

17% in mfg

increase growth in X to 20% GDP

25% M

Current Account +

80% mfg—garments

by fact of 12 since 2000s

Garments

low wages

dangerous conditions

long hours —60 hours/week

avg. earnings <$100/month

10% workers are unions

Sustainability compact for Bangladesh (EU)

-right to organize

-responsible business conduct

FDI

-only 1% GDP

-poor infrastructure (tax evasion) as %GDP —10%

-corruption 1/2foreign business report bribers

open to NGO’s (non-government organization)

Vietnam

North Vietnam —communist

Vietnam War (early 1960s— 1973)

1970s

-govt. planning

-collectivization of agriculture

-fall of USSR

late 1980s

Dol- Mol —economic reform

gradual —sold 1/2 SOEs

footware/ garments

X increase x10

to China, Japan, S Korea, Taiwan

M high, so CA deficit

2000- normalized

relation with US

WTO- 2007

since mid 2000s

5% avg. growth

retained SOEs/state control

-finance

-telecom

-transportation

-heavy industry

-goods with wide affects (cement, steel, oil)

“advance social”

relations commensurate with development production forces

Labor $150/mo. avg. mfg. wage

x2 since 2007

Un employ Rate=2%

40h/week /12h/mo overtime -enforced

77% LF participation

73% woman

social indicator

life expectancy 80 yr

Poverty 8.4%

10% GDP social protections