The one question everyone here wants answered--including the Vietnamese--is how Vietnam will manage to compete with China. China's mountainous economies of scale loom over every discussion; Vietnam has no offsetting advantages to speak of. Vietnamese economists and trade officials speak of moving up the value chain, but while this works in domestic markets, where Chinese imports are usually on the very cheapest end of the market, it's not clear how that will translate into the export market.
Moreover, China uses its vast market power to bullyrag its neighbours, and those who would trade with them--the dispute over the Spratlys is the most prominent recent example. Everyone here seems very conscious that the 600 pound gorilla in the neighbourhood could come down hard on them at any moment.
On the other hand, China's rapid growth may be pulling its neighbors along with it. Moreover, the trade officials I've spoken to have been shockingly willing (for trade officials) to consider that providing cheap goods to their country's consumers might be, well, a good thing. One nice man went on at considerable length about the many consumer benefits of cheap motorcycles--less for the opportunity to buy one, than because the competition has forced down the price of the Japanese models (assembled in Vietnam) that he prefers.
And Vietnam does have one comparative advantage I can think of: it isn't so big. To be sure, it's been saddled with textile limits, but it isn't the target of the kind of ire that China's enormous market draws. It's not unreasonable to hope that the 600 pound gorilla may attract the attention of all the big game hunters in the anti-dumping movement, leaving the Vietnamese to trade in peace.
I think you're right about China's "curse of bigness." People around the world criticize McDonald's as a stand-in for globalization itself. But who hates Burger King? Who makes documentaries about Wendy's? Sometimes, it pays to be number two.
Is that what comparative advantage means? ("And Vietnam does have one comparative advantage I can think of...") I thought it meant, roughly, that the precondition for the existence of a mutually beneficial trade is that the relative prices of goods differ between the two parties, absolute production efficiencies don't matter.
As long as I'm asking ignorant questions on an econoblog, incidentally, is there any chance you might point to what one should read about what's ridiculously wrong with a gold standard? My foggy understanding was that the switch to pure fiat currency was supposed to let the government smooth out economic fluctuations, but Friedman made a theoretical objection that it wouldn't be a big enough effect to possibly work, and then later the puzzle that it *was* apparently working was resolved in the 1980s by looking closely at changes in the way fluctuations had been (mis)measured. And while some accounts of the Depression from before the 1970s left me with the impression that switching from the gold standard was supposed to be vitally correlated with recovering from the depression, I thought that after the 1970s shattered faith in things like the long-run Philips curve, it was quietly decided that the correlation must not in fact have been particularly significant. I'm not sure the gold standard is a brilliant policy, but compared to, say, reflexively nationalizing the profits of people who paid for energy production before the price rise made the need clear to everyone, it's not obvious why it's memorably bad. And it might even be a good policy: I note that it seems to be difficult to sell 100-year bonds in a pure fiat currency, and I could imagine this is the dramatically-visible symptom of an uncertainty which is a significant economic drag even in the shorter term where it's less trivial to tease it out of the data...
Why should Vietnam focus on comparisons with China, when there are so many better (as well as worse) examples to learn from? China is an extreme in size - if it hadn't been for the Mongols, China, Russia and India wouldn't be so freakishly large.
Vietnam should look at the successes and failures of Taiwan, South Korea, Thailand, Malaysia, Indonesia, the Philippines and even Singapore and Hong Kong. Better yet, they should just modernize their economic, financial and political systems, and stop worrying about the rest. The capable people of Vietnam will figure it out for themselves if the government will just get out of their way and focus on its own role, rather than micro-managing others.
If the Vietnamese start modernizing and liberalizing their economy now in earnest, maybe by the time they're at China's level of development, China will have moved up the value chain and they can take over the business of manufacturing things like Mardi Grass beads and poisonous toys.
A few meta questions: why are you even in Vietnam? What geopolitical/economic significance does that country have now? Who cares what happens there?
Currently the businesses shifting investment from China to Vietnam tend to be computer and electronics manufacturers and light manufacturing, and shipbuilding. Vietnam's garment industry is already enormous and growing; it is a critical manufacturing location for Nike, the Gap, Timberland, et al. Growth in Vietnam's garment exports to the US slowed this year to a mere 30% or so. Vietnam has Intel's largest new investment facility, as well as the world's largest laser printer factory (recent Toshiba investment), huge Canon facilities, etc. It is positioning itself to become the world's number five shipbuilder within the next decade. Its economy has grown seven to nine percent per year every year since 2000, and its annual trade with the US has sextupled in that period to nearly $10 billion. It joined the World Trade Organization at the beginning of this year. It currently holds a rotating seat on the UN Security Council.
Fred
Who on earth said that online columnists/bloggers were only permitted to visit countries of major geopolitical/ economic significance? If that were the case, we will receive first-hand reporting from around a dozen of the worlds roughly 200 nations.
I am still bemused by the suggestion that 85 million is a small population. It would be the third biggest state in Latin America (after Brazil and Mexico). It would be (from memory)the second biggest state in Africa after Nigeria. It is larger than the UK, France, Ialy, or Germany. Sure, its not China or India, but who (apart from China and India) is?
If 85 million is small, what does that make Ireland and Israel, Norway and New Zealand?