Resource Curse or Destructive Creation: A Tale of Crony Capitalism in Transition

This paper explores the “resource curse” problem as a counter-example of creative performance and innovation by examining reliance on capital and physical resources, showing the gap between expectations and ex-post actual performance became clearer under conditions of economic turmoil. The analysis employs logistic regressions with dichotomous response and predictor variables, showing significant results.Several findings that have use for economic and business practice follow. First, in a transition period, a typical characteristic of successful firms was their reliance on either capital resources or physical asset endowments, whereas the innovation factor was not significant.Second, poor-performing enterprises exhibited evidence of over reliance on both capital and physical assets. Third, firms that relied on both types of resources tended to downplay creative performance. Fourth, reliance on capital/physical resources and adoption of “creative discipline/innovations” tend to be mutually exclusive. In fact, some evidence suggests that firms face more acute problem caused by the law of diminishing returns in troubled times. The Vietnamese corporate sector’s addiction to resources may contribute to economic deterioration, through a downward spiral of lower efficiency leading to consumption of more resources. The “innovation factor” has not been tapped as a source of economic growth. The absence of innovations and creativity has made the notion of “resource curse” become identical to “destructive creation” implemented by ex-ante resource-rich firms, and worsened the problem of resource misallocation in transition turmoil.

Vietnam’s political economy: a discussion on the 1986-2016 period

Being a member of the thriving ASEAN and successfully implementing economic renovation (Doi Moi) have drawn the world's attention on Vietnam around the turn of the millennium. Some even expected a much faster pace of transformation, and renewed economic, AND political, reforms in Vietnam, or Doi Moi II.However, in the recent transition turmoil the Vietnamese economy has experienced some significant setback, and the solution for getting the country out of the downward spiral of low productivity, waning purchasing power and increasing costs of doing business cannot be worked out without addressing those political economy issues that have shaped the modus operandi of the nation's economic system. This article discusses the post-Doi Moi political economy in Vietnam, from 1986 to 2016 – when the 12th Congress of the Communist Party of Vietnam takes place – and prospects of reviving reform momentum in subsequent years.