Development of agricultural and rural finance in Vietnam

This paper examines aspects of the development and increasing liberalization of Vietnam's hitherto socialist-oriented agriculture sector, the role of rural financial markets in that transformation process and integration into a multi-sectoral economy. The progressive abandonment of collectivization and liberalization of agriculture which predated Vietnam's 1986 doi moi reform thrust has engendered siginificant, sustained productivity gains as evidenced from the country's change in status from periodic rice importer to world's second largest rice exporter. Moreover, these gains were achieved despite rural financial markets being repressed and segmented, the failure to mobilize rural household savings, adverse terms of trade, poor inter-sectoral linkages and loss-prone financial institutions. To be sure, continuing growth in agricultural output, productivity gains, value-adding and full integration into the multi-sector economy will only be possible if a similar great leap forward is engineered in Vietnam's rural financial markets.