From 1997 to 2004, one particular country’s economy grew an average 6.8 percent, and it has accelerated since then. Its real GDP per capita has almost tripled since 1990, and is now estimated at $2,300 – two figures that, if you’ve studied growth economics, indicate it is still in transition and far below the global growth frontier based on technology. On the other hand, you might care more about the fact that 15 percent of this country’s population lived below the World Bank’s dollar-a-day line in 1993, but by 2002 that figure was only 2 percent. Consider also that this growth was achieved while maintaining a Gini coefficient [measuring distribution of income] of .37; far more equitable than America’s .45, China’s .47, or Brazil’s .57. Or perhaps you care about infant mortality – cut in half from 1993 to 2002.

This country… is Vietnam.

According to the Economist Intelligence Unit (EIU), over 252,000 small and medium-sized enterprises (SMEs) are formally registered in this former communist economy, including 43,000 new SMEs in 2006 alone. An estimated 85 percent operate profitably year round. Together, EIU claims, these SMEs account for 39 percent of GDP and 32 percent of investment. What do these SMEs do, exactly? Vietnamese exports grew from $15.1 billion in 2001, to $39.6 billion in 2006. Whether directly involved or not, Vietnam’s SMEs rely on income generated by international trade.

That’s why it’s so frustrating to read stories like one from the BBC about the ongoing Doha Round negotiations of the WTO. Perhaps the most disheartening exchange was:

In another area of contention, former European colonies have threatened to block a trade deal to reduce the EU’s controversial tariffs on Latin American banana imports. The African, Caribbean, and Pacific (ACP) trade grouping said the 35 percent cut agreed by EU and Latin American officials on Sunday was unacceptable.

That’s one group of developing economies pitted against another – nothing new, of course, but considering it was a European idea to cultivate bananas from Latin America, where European colonizers imported the region’s first banana trees, the irony of that tariff is tragically comic.

While it was good news that negotiations are back on, lack of political will threatens progress in Vietnam and many other developing economies, progress toward eliminating poverty, and progress toward eliminating one-party rule – as economic pluralism leads to political pluralism. There is no instant, easy process; it is very much a struggle, but it is not made easier by politicians, in developing and developed economies, continuing to play trade like a chess game with the poor as their pawns.

Published Date: July 29, 2008