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The new politics of debt in the transition economy of Vietnam
[journal article]
Abstract This study reviews the rising household debt and nonfinancial corporation debt in Vietnam, a socialist-oriented, lower middle-income emerging economy. Vietnam has made huge strides in economic growth within three decades of reforms, lifting millions of people out of poverty thanks to better access t... view more
This study reviews the rising household debt and nonfinancial corporation debt in Vietnam, a socialist-oriented, lower middle-income emerging economy. Vietnam has made huge strides in economic growth within three decades of reforms, lifting millions of people out of poverty thanks to better access to credit. At the same time, there are lending and borrowing practices that signal troubles ahead. Based on a thorough examination of the theoretical literature on indebtedness, the study sets out to identify the drivers of borrowing and over-borrowing in Vietnam in recent years. Particularly, the abundant financial and physical resources have given rise to consumerism and the boom of the super-rich. These are two of the four factors that have shifted Vietnamese culture from one that traditionally condemned debt as a vice to one that now tolerates indebtedness. The other two factors can be found at the corporate level where there is an over-reliance on debt financing and rampant rent-seeking. Here, a kind of 'resource curse' threatens sustainable corporate growth - businesses rely too much on borrowing to fuel their operations, but in fact are overlooking the innovation factor. The new politics of debt, we suggest, have created a toxically pro-consumption, debt-tolerant society.... view less
Keywords
Vietnam; newly industrializing countries; economic growth; combating poverty; lending; consumption; income distribution; indebtedness; psychosocial factors; Southeast Asia
Classification
National Economy
Financial Planning, Accountancy
Free Keywords
Consumerism; Corporate Debt; Culture of Indebtedness; Emerging Market; Household Debt
Document language
English
Publication Year
2019
Page/Pages
p. 91-110
Journal
ASEAS - Austrian Journal of South-East Asian Studies, 12 (2019) 1
ISSN
1999-253X
Status
Published Version; peer reviewed
Licence
Creative Commons - Attribution-Noncommercial-No Derivative Works 3.0