The political economy of policy exceptionalism during economic transition: the case of rice policy in Vietnam

Crawford School Working Paper 1713
Author name: 
Nguyen, H.T.M.
Do, H.
Kay, A.
Kompas, T.
Nguyen, C. N.
Tran, C.T.

The global food security agenda depends on the world rice market which is the thinnest among key cereal markets and often distorted by government interventions. Existing literature suggests that these interventions are not economically efficient. This paper focuses on the political economy of those interventions, asking why they were adopted. The answer is drawn from insights on Vietnam as a case study. Although by no means a representative case, Vietnam is chosen not only for being a key rice exporter but especially so for its unique success in overcoming the inherent tension between ‘socialist’ and ‘market-based’ objectives during its transition to a market-based economy, albeit with a socialist orientation. We find that rice sector in Vietnam has not been fully reformed to follow market rules despite Vietnam’s accession to the World Trade Organization. This is due to the interaction of economic liberalisation processes and the ruling Communist Party’s political survival strategy. In this context, seemingly economic disequilibria are shown to be stable, enduring policy settings. In open economy politics, the case reveals how economically sub-optimal policies may be `successful’ politically even in the face of what appear to be severe domestic political constraints on reform from external economic pressures.

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