Economic System for Vietnam: Social Welfare System

Abstract

The Vietnamese economy is similar to the Korean economy in the later half of the 1980s in terms of income and economic structure. Therefore, today’s policy makers in Vietnam has similar issues and problems policy makers in Korea had faced in the past. In particular, they concern about advanced human resource, public sector reform, and economic policies to upgrade their economic structure. This book compares today’s Vietnam to Korea’s past in five areas. Chapter 1 estimates developmental gap between two countries, and provides policy measures for Vietnam not to fall into middle-income-trap. Chapter 2 introduces concept of economic system, and analyze social welfare system. Korea has introduced social welfare system in the 1980s, and gradually expanded it. While health insurance system of Korea is evaluated as a success case, the national pension system is evaluated as a failure case. Based on Korean experiences, the author is providing policy suggestions for the Vietnamese social welfare system. Chapter 3 analyze prudent macroeconomic policies for economic growth and financial market development. In particular, based on two economic crises Korea had experienced, the author suggests macroprudent capital flow, prevention of household debt, and effective way to utilize foreign capital. Chapter 4 emphasizes fair competition, SOE reform, and improving international competitiveness of private sector. Also, it introduces ways to set up effective industrial policies. Chapter 5 analyze labor market and aims to make flexible and secure labor market. It suggests to establish the three party committee between labor, manager, and government. Also, it emphasizes the importance of re-training.