Economic Models of Mongolia and Vietnam: Common and Distinctive Features

Abstract

New economic models began to develop in Mongolia and Vietnam after the collapse of the Union of Soviet Socialist Republics (USSR), when former Soviet republics formed the Commonwealth of Independent States (CIS). Further development after the USSR’s dissolution was especially difficult for Mongolia, which almost entirely relied on the economic aid from the USSR. The US and the International Monetary Fund (IMF) immediately took advantage of the crisis in Mongolia. They offered tranches to Mongolia under the condition of complete democratization of political power and establishment of market-based development institutions within the framework of a standby arrangement. Vietnam embarked on a course of destroying the socialist model in 1986, i.e. before the USSR’s collapse, and its transition to a market economy was peculiar, yet significantly different from Mongolia’s.

Aim. The presented study aims to examine the benefits and drawbacks of the economic models of Vietnam and Mongolia as well as their common and distinctive features.

Methods. The study uses general methods of analyzing the international experience of transforming economic models.

Results. The authors prove the efficiency of the current Mongolian and Vietnamese models in the context of global instability and crises. Emergence of new, highly efficient technological paradigms and absence of internal political protests in Mongolia and Vietnam ensure economic sustainability and high growth rate. Russia’s military aid to these countries also plays an important role.

Conclusions. After the collapse of the Soviet Union, Mongolia received substantial assistance from the United States and was able to maintain state independence and develop its economy under the market conditions of economic activity. Relying on cooperation with Russia and China, in the 21st century Mongolia engaged in the processes of integration in the Asia-Pacific region (APR). The Vietnamese model was forming during the country’s participation in the ASEAN free trade zone and cooperation with the developed economies of Japan, the Republic of Korea, and the United States. Unlike Mongolia, Vietnam retained full political leadership of the Communist party, the unity of its people, and support for the development of market economy. In confronting difficult challenges, Vietnam receives assistance from the Donor Club.