In 2010, during the graduation ceremony for Fulbright School’s first Master of Public Policy cohort, the late Prime Minister Phan Van Khai remarked that he himself had learned a lot, especially about the market economy, through discussions with a group of Harvard and Fulbright professors. Such knowledge, which he “successfully applied during his tenure, contributed to the development of the country”.

As the Prime Minister of Vietnam from 1997 to 2006, he was one of the technocratic leaders with the most substantial contributions during the country’s reforming and opening period. He also played an influential role in establishing the Fulbright Economics Teaching Program, the predecessor of the Fulbright School of Public Policy and Management at Fulbright University Vietnam today.

His deep connection with the Fulbright School stemmed from a study trip to learn economic reform lessons from East Asian countries, organized by a group of Harvard professors who founded the School in the early 1990s. At the time, Mr. Khai was the Vice Chairman of the Council of Ministers (the equivalent position to the current Deputy Prime Minister). He and other senior officials in charge of the economic sector in the state apparatus then learned methodically for the first time the core pillars of the market economy – from supply and demand, prices, exchange rates, to the import-export mechanism – concepts that were still extremely foreign to those who had just come out of the centrally planned economy.

The then Prime Minister Phan Van Khai attended the graduation ceremony of the inaugural Master  Public Policy cohort

Although the Doi Moi process started in 1986, “Vietnam’s development programs, guidelines and strategies were still very vague and exploratory” because “very few people understood the principles of economics,” recalled Professor Thomas Vallely, Director of the Vietnam Program at Harvard University, who organized the study trip that year.

The impression from this trip was so profound that later on, Mr. Khai became an avid advocate for the idea of a training program in applied economics for Vietnamese leaders and officials taught by Harvard professors, at a time when the relations between the two countries still had not fully normalized.

That was because Mr. Khai, along with other visionary Vietnamese leaders at that time, understood that more than ever, the country needed leaders with knowledge and a market economy mindset in order to successfully lead the transition from a centrally planned economy to a market economy.

Later, Dr. Jonathan Pincus, Director of FETP from 2008 to 2013 noted that FETP “was an excellent idea born at the right time”.

A factor that shaped the Fulbright School in its early days was the emergence of Asian economies and the aspiration of Vietnamese leaders to be a part of the historic movement where the economic center of the world shifted from West to East,” said Mr. Pincus.

Overcoming numerous obstacles and challenges from both sides, eventually, Ho Chi Minh City, which had been considered a “laboratory” for innovative ideas in the early Doi Moi period, was chosen to be home to a Harvard training program. In January 1995, the Fulbright Economics Teaching Program (FETP) was officially established, only half a year before Vietnam and the United States normalized diplomatic relations.

Dr. Jonathan Pincus, Director of FETP 2008-2013

Foreseeing Vietnam’s path of reformation

When the Fulbright School was established, the founders faced different choices and they made strategic decisions that set Fulbright apart from any other economic or political training program in Vietnam even later on. It was a decision to not target central-level officials like the typical approach, but to focus on modern economic knowledge and improving management capacity for local government officials instead.

In the early 90s of the last century, access to modern economic management knowledge was a luxury for local officials,” explained Mr. Vallely.

This decision of the Fulbright founders also came from keen observations of Vietnam’s reform trajectory when Mr. Vallely and his partner, Professor Dwight Perkins, Director of the Harvard Institute for International Development, visited Vietnam and did a survey here in 1989. They found that Vietnam’s crucial national economic reform was largely driven by local reformations, which were later often described as a journey to “tear down” the old mechanism from the bottom up.

These ‘jumping the fence’ actions, such as the discreet ‘agricultural land allocation’ movements in localities on the verge of renovation were meant to ‘emancipate’ production and business activities that have been suppressed for too long in the old mechanism. These reforms were successful because they precisely hit local pressure points. When central-level leaders observed that these experiments succeeded locally, they felt confident and bold enough to enact them into national policies,” Dr. Vu Thanh Tu Anh, Director of the Fulbright School of Public Policy and Management, explains.

Professor Thomas Vallely, Director of the Vietnam Program, Harvard University and Harvard University President Catharine Drew Gilpin Faust at the Fulbright Economics Teaching Program in Ho Chi Minh City.

Professor Thomas Vallely and students from the Fulbright School of Public Policy and Management during a short course at the Harvard Kennedy School.

According to Dr. Tu Anh, FETP’s decision to focus on training local officials, therefore, showed ‘a deep understanding of the reform trajectory in Vietnam’ and such incredible ‘foresight’ that even to this day, he still feels truly fascinated and grateful about.

As a result of that strategic decision, a community of more than 1500 alumni from 62 out of 63 provinces in Vietnam has become an invaluable asset of FSPPM today. They have contributed to forming an excellent class of officials and civil servants of Vietnam in the Doi Moi era, pioneers who created positive change in their own communities.

Mr. Seth Winnick, U.S. Consul General in Ho Chi Minh City, shared a story with Dr. Vu Thanh Tu Anh which happened more than 10 years ago. Whenever he went to localities in Vietnam and met Fulbright alumni, he could recognize them almost immediately by their distinct expression of the “Fulbright DNA”. He even coined the term “FETP Index” – a province with a high index means there are many FETP alumni working there and they are definitely at the forefront of innovation and reform in Vietnam.

The outstanding contributions of FETP alumni didn’t just take place locally. Many people, after serving in the leadership role of a particular province or department, have been promoted to the Central Government to lead the planning and implementing of important policies at the national level.

In 2013, Mr. Nguyen Xuan Phuc, then Deputy Prime Minister, led a delegation of high-ranking Vietnamese officials to attend the Vietnam Executive Leadership Program (VELP) – a joint initiative of the Vietnamese Government, the United Nations Development Program (UNDP), the Vietnam Program at Harvard University, and FETP.

Global knowledge – local action

When it first started, FETP did exactly what was “requested” by the Government of Vietnam at that time, which was to impart the most up-to-date knowledge on market economy to state officials, in accordance with the context of the country.

We then taught neoclassical economics courses the way you would at Harvard, with the Harvard Kennedy School’s curriculum being translated into Vietnamese in a way that was easy to understand,” recounted Mr. Thomas Vallely.

Mr. Cao Van Trong, former Chairman of Ben Tre province was one of the first students of FETP. Before entering in the program, he had already obtained a bachelor’s degree in industrial economics from the Ho Chi Minh City University of Economics. However, a year at FETP for him was an entire journey of “reconstruction”, from his knowledge to vision and thinking.

We learned very new knowledge about micro- and macro-economics, about the economy management tools, especially the two very important tools in the market economy: fiscal and monetary policies. But the most significant thing that I learned from Fulbright is the approach and mindset that dissects an issue from many different angles. That is a timeless value,” said Mr. Trong.

Taking it a step further, when FETP has built trust with the society and with the government system, the lecturers were able to boldly put real Vietnamese practices at the heart of the training program. Harvard’s famous “case study” method was modified by the lecturers to suit the Vietnamese context, which Dr. Vu Thanh Tu Anh often likened to the journey of “Vietnamizing global knowledge”.

2008 marked a historic milestone for FETP when it changed from a 1-year applied economics training program to a 2-year master’s degree program in public policy – the first Master in Public Policy program in Vietnam. Transcending the framework of a traditional economic training program, the School had begun to venture into the “sensitive” but increasingly urgent issue in Vietnam: public policy, public management, and public administration.

That was because, as explained by Dr. Vu Thanh Tu Anh, after more than 20 years of renovation and integration into the global economy, Vietnam had entered a period when the old driving forces of growth had gradually become outdated and required the apparatus to introduce drastic reforms, especially in terms of institutions. The decisions were no longer simply to “emancipate” from the old mechanism as before, these reforms must be relevant to the vivid, creative, and multi-dimensional realities in the drastically changing context of Vietnam and the world.

Former Trade Minister Truong Dinh Tuyen was one of the regular visiting lecturers of the Fulbright Economics Teaching Program.

In order to solve these increasingly complex policy problems, leaders and executives needed to be equipped with new knowledge and mindsets. Therefore, Fulbright School’s faculty members have made constant efforts to create new knowledge that caters to the needs of the time. There are Fulbright “specialty” subjects such as Regional and Local Development, Public Investment Appraisal, Law and Public Policy… Every lesson at the Fulbright School has now turned into lively discussions about practical problems facing Vietnam.

From environmental and energy policy for the Mekong Delta region, to the strategy to promote infrastructure development projects following the public-private partnership (PPP) model, or even the strategy to build Thu Duc into a smart city, each graduation thesis of Fulbright students has been very practical policy analysis that they can continue to pursue after returning to their daily work.

Dr. Vu Thanh Tu Anh and students of the Fulbright School of Public Policy and Management during a field trip to study about Regional and Local Development in Hue

According to a veteran Vietnamese diplomat, it is the journey of engaging in the center of socio-economic development of Vietnam over the past 25 years, reflected in the constant efforts to update the curriculum to accommodate the needs of the community and provide the country with high-quality human resources has helped “Fulbright to become the only international educational exchange program that still continues to reach new heights”.

While other projects came to an end, FETP has now become the Fulbright School of Public Policy and Management (FSPPM), one of the first 10 public policy schools in Asia and the first in Southeast Asia to achieve accreditation from NASPAA – the “golden standard” of public policy, public management, and public administration schools around the world.

When they put down the first bricks to begin the construction of a humble school, located in a small alley on Vo Thi Sau Street, the founders of FETP could not have expected that it would go this far. Right now, Fulbright is not only “the most important educational legacy in the Vietnam-US relations”, but also an “invaluable intellectual property” of Vietnam.

Viet Lam

Over 30 years ago, Thomas Vallely was invited by Vietnamese leaders to visit Hanoi. The former Marine Corps soldier then Vietnam Program Director at Harvard University could not imagine this would be the beginning of a journey to create one of the most important educational legacies in Vietnam – US relations.

Building upon the legacy of the Fulbright Economics Teaching Program (FETP), a partnership established in 1994 between Harvard Kennedy School of Government and University of Economics Ho-Chi-Minh City, the Fulbright School of Public Policy and Management put itself on the map, 25 years later, of world-class public policy schools, as it became the first program in Southeast Asia to receive NASPAA accreditation.

By integrating international economic-policy analysis to tackle the development challenges facing Vietnam, Fulbright has helped nurture a new generation of leaders, with over 1400 alumni now serving in the government, state-owned and private enterprises, as well as academic institutions across the country – organizations that are “thirsty” for competent personnel amidst a shortage of high-quality human resources in the economy.

And yet, education and training represent only the first, most immediate of successes achieved by Fulbright in a quarter of a century striving at the core of policymaking in Vietnam. The school has become a reputed source of critical scientific research addressing political and economic issues, engaging in straightforward policy exchanges with Vietnamese leaders on the country’s most complex problems.

It is a little-known fact that Fulbright’s hands-on approach, and its significant influence on national policymaking today, all began over thirty years ago, when a group of Harvard professors first arrived in Hanoi.

From a study trip of Vietnamese leaders on the market economy…

In early 1989, when Thomas Vallely and Professor Dwight Perkins, then Director of the Harvard International Development Institute, visited Vietnam, the two countries had yet to normalize their relations. Mr. Vallely recalls they had to transit in Thailand and secure their visas directly at the Noi Bai border gate.

Vietnam was just entering the Doi Moi reform process and was facing a severe economic crisis. Inflation exceeded 400%. In the winter of 1987-1988, a majority of the population in the North and the Central region suffered food shortages. A year later, Vietnam’s key trade partners and aid providers, the Soviet Union and Eastern European socialist countries collapsed, pushing the country deeper into crisis. The Harvard delegation’s impression of Hanoi was comprised of “empty shelves, barely any hotels, roads full of cyclists, with a few Jeeps passing by.”

The scars of war with the US hindered any possibility to cooperate. “There were few people who understood economics that we could talk to,” said Professor Perkins. Vietnam’s then incumbent Foreign Minister Nguyen Co Thach confessed to the Harvard professors that he read and translated Paul Samuelson’s book “Economics” in order ­to learn about the principles of market economy –anything to find a way out of a post-war ruined economy.

Prof. Perkin in a meeting with Mr. Nguyen Co Thach, Minister of Foreign Affairs

This pragmatic approach to problem solving on the part of Vietnamese leaders was the foundation which made possible the establishment of the Fulbright School. In contrast to their initial concerns, the Harvard expert team found itself welcomed and supported as the researchers delved into prominent economic issues. Agriculture and industry were the two initial focal points of research, with the first study results compiled in the book “In Search of the Dragon’s Trail” published in 1994. The book applied market theory to outline the underlying principles of economic equilibrium in a “market-oriented” Vietnam, with ensuing policy proposals, from macroeconomics to individual sectors. The ambition: take advantage of the lessons from “tiger” economies of other East Asia nations, and transform Vietnam into a “dragon”.

Deputy Foreign Minister Le Hoai Trung was assigned by the Ministry of Foreign Affairs to be the interpreter for the exchanges between the Harvard delegation and Mr. Dao Duy Tung, then Executive Secretary of the Communist Party’s Secretariat. According to Mr. Le Hoai Trung, “In Search of the Dragon’s Trail” was well-received and read by many senior leaders. Former Agriculture Minister Cao Duc Phat, who supported the research efforts, recalls it “made a significant contribution to the reform process.”

But it was perhaps the educational endeavors of Harvard’s Vietnam program that left the most lasting impact. In 1990 and 1991, Thomas Vallely and David Dapice, another economist at the Harvard International Development Institute, organized two study trips for Vietnamese policy makers, economic ministers and many other senior officials to visit Indonesia, South Korea, Taiwan and Thailand. For many participants, this was their first opportunity to visit their rapidly developing neighboring countries, and to meet foreign colleagues and peers responsible for promoting economic growth and improving people’s living standards.

The discussion sessions, according to Dr. Dapice, revolved around a wide variety of topics, from the role of education and the structure of modern society, to candid conversations about issues that Vietnamese leaders were deeply concerned about, including the interrelations of financial and political power, or the emergence of corruption. Dr. Dapice described economic principles and solutions, for instance: how to minimize the risk of unforeseen fertilizer shortages in a planned economy by trading with foreign suppliers and elevating prices to attract sellers. “Every time an official would encounter , the immediate question was ‘how can we do this?’,” Mr. Vallely recalls. Among the participants of the study trips was Mr. Phan Van Khai, who later became Prime Minister of Vietnam from 1997 to 2006, one of the most eminent reformers and expert administrators steering the opening and renovation of Vietnam’s economy.

Former Prime Minister Phan Van Khai in a visit to Fulbright School

The late Prime Minister once acknowledge the value of lessons learnt through discussions with the Harvard scholars, most notably about the market economy. “I have successfully applied this knowledge during my incumbency to contribute to the development of the country,” Mr. Khai said at the 2010 commencement ceremony for Fulbright’s first Master in Public Policy graduates.

… to the “Vietnamization” of global knowledge

The impact of the study trip on Asian market economies was significant enough that ​​Harvard’s presence in Vietnam, training or advising Vietnamese officials and decision makers on applied economics, was no longer a political pipe dream, even as the relationship between both countries had yet to normalize. The University of Economics Ho-Chi-Minh City was chosen to collaborate with Harvard University’s Vietnam Program to establish the Fulbright Economics Teaching Program (FETP). In 1994, the construction of FETP’s facilities began in the Vo Thi Sau area, District 3, with a budget of 1’750’000 USD funded by the US Department of State.

In the beginning, FETP organized one-year training courses in economics which replicated the curriculum of the Harvard Kennedy School. Distinguished lecturers from top US universities were invited to teach in Vietnam, such as Professor Perkins, who delivered a course modelled after his East Asia Development Economics class at Harvard, Professor Dapice from Tufts University, and Professor James Riedel from John Hopkins University, with the help of Vietnamese teaching assistants. “Back then, we taught neoclassical economics the same way we did at Harvard. We used American textbooks and didn’t really connect what we taught with public policy issues in Vietnam,” Mr. Thomas Vallely recounted.

Even though the program only taught economics classics, FETP’s first students described the course as “eye-opening, expanding our perspective with new thoughts and knowledge.”

Mr. Cao Van Trong, Chairman of Ben Tre Provincial People’s Committee, was in 1994 one of those first students. When he joined the program, he had already obtained a bachelor’s degree in industrial economics from the University of Economics Ho-Chi-Minh City. During his one year at FETP, Mr. Cao Van Trong and his classmates found themselves excitedly discovering “completely new knowledge about micro and macroeconomics, about economic governance tools, and especially two extremely important facets of a market economy: Fiscal policy and monetary policy”.

Computers and the Internet were still rather new, foreign concepts to the majority of Vietnam’s population, at least until late 1997 when Vietnam joined the global Internet. FETP students were thus taught to operate computers and use them effectively for academic and research purposes.

It took 5-6 years, according to Mr. Vallely, for FETP to observe, research and experience Vietnam’s sociopolitical and economic context comprehensively enough to integrate the nation’s vividly relevant, real-life issues into the syllabus. Some subjects were unique to Fulbright, such as Local Marketing, Appraisal of Investment Projects, or The Relationship between the State and the Market. “In developed economies, such issues are no longer critical or prevailing. But as the Vietnamese economy is transforming and demanding drastic reforms, these new concepts and knowledge become crucial,” Dr. Vu Thanh Tu Anh explained.

Even in classically relevant subjects comprising standard economics training courses around the world, such as Microeconomics or Econometrics, Fulbright lecturers incorporated practical situations in Vietnam to ensure learners can immediately apply what they learned into analyzing policy or solving a management problem.

Mr. Thomas Vallely, Founder of the Fulbright Economic Teaching Program

At Fulbright, the Local Marketing course teaches students ways to promote investment and develop the local economy. Mr. Phan Chanh Duong, the course’s lecturer, was one of the founders of Tan Thuan Export Processing Zone, the first export processing zone of the country in the early 1990s. He also took part in transforming an isolated swamp into what is now the Phu My Hung urban area, a thriving economic and financial hub of Ho Chi Minh City. With his experience, Mr. Duong has turned every lesson into vibrant discussions about real situations and questions that each student faces in their job. “At Harvard Kennedy School, courses focus on theory and building models to try to understand how the world works, meanwhile, students here are always concerned about actual issues that Vietnam is facing – how do you find a solution; how do you get there?” – Mr. Duong remarked.

Bringing practical problems into the classroom, debating with their lecturers and classmates to find pragmatic and innovative solutions has become a signature trait of Fulbright students. From environmental and energy policies for the Mekong Delta region, to enhancing the efficiency of public-private partnerships (PPP), or building a modern state governance, Fulbright students’ dissertations are highly practical policy analyses that they can continue to pursue even after graduation as they return to their daily jobs.

During his leadership of Quang Nam province in the 2000s, Mr. Nguyen Xuan Phuc, one of FETP’s Executive training program alumni left his marks with efficient policies and initiatives to develop the local economy, most notably with the Chu Lai Open Economic Zone and Hoi An City. “One time, a group of Fulbright lecturers was invited by Mr. Phuc to visit Quang Nam. He wanted to consult with them about his vision to turn Hoi An, then still devoid of tourists, into a dynamic and vibrant destination,” Mr. Vallely remembers, “however, there was also a proposal to build a coal power plant. That was when Professor David Dapice had a frank conversation with his former student: ‘You can only choose between tourism and thermoelectricity. Quang Nam cannot have the Hoi An you want and a thermal power plant.’”

Hoi An has since become a world-famous tourist destination, while the former Chairman of Quang Nam’s Provincial People’s Committee went on to become Vietnam’s current Prime Minister.

For the Chairman of Ben Tre Provincial People’s Committee, although the knowledge he acquired 25 years ago is by his own admission outdated, the underlying philosophy continues to help him to this day. “What I learned at Fulbright is how to approach a problem. It’s a way of thinking, a way to look at it from different angles; that is never obsolete,” Mr. Cao Van Trong emphasized at a dinner with Dr. Vu Thanh Tu Anh.

  • Viet Lam

 

 

 

 

 

 

In early 2008, an atmosphere of satisfaction and optimism prevailed in Vietnam. After over 20 years of Doi Moi reforms resulting in significant economic growth, many people emerged from poverty and entered the middle class. Massive flows of foreign investment flooded into Vietnam, triggering an unprecedented stock market boom. As a sovereign nation, Vietnam gained respect and increasing influence in the international community.

In this context, a group of authors comprising Harvard scholars and Fulbright Economics Teaching Program (FETP) lecturers published a policy analysis titled “The Choice of Success”, causing a stir in the Vietnamese public. The monograph earnestly warned about the increasingly pressing risks of crony capitalism in Vietnam. In other words, the emergence of privileged groups benefitting from maintaining the status quo was hindering policymaking and blunting motivations to continue reforms. By presenting persuasive analysis and data, the authors demonstrated that unless Vietnam could build a “firewall” to isolate economic power from political power, the country would fall in the middle-income trap. The authors hence proposed a socio-economic development policy framework for Vietnam in the period of 2011-2020.

The group of scholars’ assessments and warnings, unsurprisingly, shocked the entire system when published, especially when Vietnam was constantly receiving accolades from aid providers, such as the World Bank and international investment banks, as well as the global press. Many were concerned FETP and the authors involved might be in a difficult situation for their outspoken criticism on a rather sensitive subject. But for insiders Dr. Vu Thanh Tu Anh and specialist Nguyen Xuan Thanh, well-aware of the responsibilities of their school from the very beginning, were not at all afraid or worried. “Fulbright’s mission is to deeply engage in the policy discussion process, to promote beneficial and feasible draft policies. In order to do this, the school must conduct independent and objective policy research, looking directly at Vietnam’s weaknesses and talking face to face with the state, from senior leaders to local officials,” professed specialist Nguyen Xuan Thanh.

“Our credibility arises from criticism. Although criticism itself does not create value, it is truly valuable when done in a constructive manner for the common good. Sincere and science-based criticism gives you power in debate. And we have conscientiously pursued that from the start,” added Dr. Vu Thanh Tu Anh.

Indeed, FETP’s straightforward policy criticism, while it risks offending someone in the system, is acknowledged by leaders who have come to appreciate Fulbright’s direct yet positive and constructive critique.

Mr. Thomas Vallely, Director of the Vietnam Program at Harvard University and founder of FETP defines the distinct formula Fulbright’s policy analysis success: high quality research and practical policy reviews.

“Fulbright’s policy studies are not written to be published in economics journals. If you write for an economics journal, no one in Vietnam would understand what you are talking about because it would be just like a math problem. You must write about the problem and analyze it in a way that makes it approachable to the public. You must understand the problem and write something that is feasible for a government or party official so that they can understand the problem and implement the solution,” Mr. Vallely explained.

Fulbright’s brand of constructive criticism has impacted policymaking positively over the years, such as with the government decision, starting in the mid-1990s, to loosen regulations on telecommunications.

“Today, young people can easily pick up the phone, go to Facebook, and they take it for granted. Actually, they can now access the Internet easily because Vietnam decided to follow our carefully researched recommendation. The proposal consisted of a telecommunications system that remained state-owned, but with judicious space for competition. I remember that research was conceived at a time when FETP was one of the few institutions with internet access, and the government considered whether to universalize Internet in Vietnam.”

The debate raged fiercely within the halls of government before FETP shared its recommendations for consideration. In 1995, Viettel became the second official telecom service provider in Vietnam, competing directly with VNPT. Although both companies were state-owned, their competition forever changed the landscape of the telecommunications market, making the Internet cheaper, more accessible and widely connected across the country. Vietnam is now one of the countries with the highest Internet coverage in Southeast Asia with 58 million users, consistently ranking among the fastest growing telecom markets in the world over the past 10 years.

“We know that our input is not always well received, but at least we have played our role in the policy debate. And the great thing about Vietnam is that they like us doing it,” said Mr. Thomas Vallely.

Strong advocacy for reform

Constructive criticism of policymakers in Vietnam of this caliber was few and far between at the time, contributing to FETP’s unique advantage. Consistently pursuing this style from the beginning set Fulbright’s policy research apart as a well-received staple of policy conversations in the country.

But what followed demonstrated that realizing Vietnam’s potential is never easy. After nearly twenty years of economic renovation, Vietnam and the world has changed drastically. So has FETP – now the Fulbright School of Public Policy and Management (FSPPM), in the way that its faculty is increasingly engaged in addressing major challenges facing Vietnam.

These challenges arose from numerous problems of the political and economic system. As Professor Dwight Perkins once wrote, the measures taken in 1989, including opening borders, forcing state-owned enterprises to compete and curbing subsidies to this sector, seemed to indicate “a total willingness towards rapid and powerful reforms”; however, that was not the case.

Perkin in a meeting with General Secretary Do Muoi

Revenue from oil, gas and agricultural products, the rapid growth of textile and footwear exports processed in foreign-invested factories, as well as the sudden abundance of development aid following the normalization of Vietnam-US relations made for a delicate equilibrium which policymakers were hesitant to upset, hampering further renovation. The Asian financial crisis of 1997 caused a major deceleration in economic growth, according to Dr. David Dapice, prompting the state to increase control over the economy. Even so, private enterprises emancipated under the 1999 Enterprise Law thrived, registering an 8% increase in gross domestic product from 2005 to 2007.

In the middle of 2007, with GDP growth peaking, then Prime Minister Nguyen Tan Dung “ordered” Harvard University’s Vietnam Program to critique Vietnam’s development strategy for the next decade, from 2011 to 2020. In other words, to continue the work of “In Search of the Dragon’s Trail” in an era of trade globalization and international supply chains, of China’s phenomenal growth, an era with new requirements for more complex domestic economy management. The Harvard group of scholars and Fulbright lecturers took this opportunity to conduct their most objective assessments of the situation in Vietnam before presenting their findings in the famous policy analysis titled “The Choice of Success”.

Professor Perkin and Professor Dapice discussing with senior executive Vietnamese officials

The researchers realized that “Vietnam [was] losing a significant part of its resources due to waste and corruption” in public investment, with several notable infrastructure projects behind schedule, exceeding budget and of poor quality. In many cases, the project was chosen without appropriate economic criteria, typically deep-water ports along the central coast. Meanwhile, infrastructures in population hubs such as Ho-Chi-Minh City, Binh Duong, Dong Nai, and Ba Ria-Vung Tau, accounting together for nearly 60% of the country’s population and labor growth, were already severely overloaded. The national economy was severely disrupted by “politically powerful individuals and groups […] converting national assets to private ownership through shady real estate transactions and internal stakes.” Meanwhile, the financial system suffered from a “failure to separate economic power from political power. While the non-state sector creates more than 90% of employment in the industrial sector and nearly 70% of industrial output, the majority of state credit and investments goes to the state sector.”

The study identified specific policymakers, agents and interest groups influencing national financial institutions to support underperforming state-owned enterprises– a strategy that was essentially compared to “a football coach who recruits the worst players to compete in the final match.” To achieve development goals, Vietnamese leaders needed to improve the quality of education, reform public finances, enhance corporate transparency, empower the State Bank, and “let go of unrealistic and illusionary policies.” Comparing Vietnam with other Asian economies, the analysis suggested strongly that the desired results were achievable by making the right choices; but those choices lied not in ideology, and instead revolved around the proper governance of a modern state.

Barely a few months later, the authors’ alarmed predictions were realized. State-owned enterprises, as predicted by Fulbright researchers, exploited their “close relationship” with state banks and party leaders. They took out excessive loans and branched out beyond their core business, plunging into real estate and other speculative activities, contributing to the shocking inflation rate of 23% in 2008. The global financial crisis erupted in the second half of 2008, followed by a recession that dragged Vietnam ‘s growth rate to much lower than the level Asian “dragons” had maintained over the past three decades. The powerhouses once considered the “steel punch” of the economy, including Vinashin and Vinalines, fell into a downward spiral and were on the verge of bankruptcy. Private companies were discouraged because of the unfair competition with state-owned enterprises. Vietnam’s per capita income was only one-third that of China and only equaled to a small fraction of the average income in South Korea or Taiwan. It could not even match less successful East Asian countries like Thailand or Indonesia – places that Vietnamese leaders had visited over twenty years ago with the eagerness and desire to emulate their success.

New standards for public policy discussion in Vietnam

In the past, criticizing public policies was a taboo. Remarks were only made via unofficial channels or without the presence and participation of the press. With Fulbright policy studies, the public, whom the school believes “has a right to know what is happening in their country”, to quote Dr. Vu Thanh Tu Anh, is allowed to access and participate in discussing important issues of the country.

“The Choice of Success”, “Unblocking institutional bottlenecks to restore growth”, “Institutional reform: From vision to practice”, all annual policy studies of FETP, have ignited discussions in many newspapers when published, bringing together intellectuals, experts, and citizens concerned with the prospects of their country’s development. Audacious voices became louder, proclaiming the truth and dissecting weak points of the economy. To quote an economist, the Fulbright School effectively “created a new standard, a new framework for policy discussion in Vietnam.”

After “The Choice of Success,” the Government of Vietnam decided to authorize a more frequent and candid channel for dialogue on thorny reform issues facing the country. As a result, the Vietnam Executive Leadership Program (VELP) was launched in late 2008, with funding from the United Nations Development Program. Since then, VELP has welcomed senior Vietnamese leaders and policymakers, often led by a deputy prime minister or a Politburo Commissioner, to Harvard Kennedy School for a week of discussions with leading experts, addressing globalization and the competitiveness and socio-economic development of Vietnam.

The discussion agenda for each VELP program was jointly developed by FETP faculty and Harvard scholars through consultations with Vietnamese government leaders. VELP, according to specialist Nguyen Xuan Thanh, “has contributed significantly to the policy debate, so that the government can come up with better policies.” With an in-depth understanding of Vietnam’s socio-economic issues and the ever-increasing familiarity of faculty with Vietnam’s challenges and possibilities, such discussions have become highly sought after among Vietnamese policymakers.

While the theme of the early VELPs focused on unblocking “institutional bottlenecks” to stimulate economic growth, in recent years, VELP has shifted its focus to the global technological revolution trends affecting Vietnam. In December 2019, a group of senior Vietnamese leaders, led by Mr. Nguyen Van Binh, Politburo Commissioner and Chairman of the Central Economic Committee, spent a week at Harvard to discuss and learn with top scholars such as Professor Jason Furman, former Chairman of the Economic Advisory Council under President Obama, as well as leaders of major technology corporations including Google and Facebook on ways to attract foreign direct investments in the tech industry, whether through cloud technology, network security, or computerized public service innovation.

“VELP has provided us with new perspectives and a deep understanding of world economic issues, particularly major economies like the United States, China, and the EU, which are extremely important for Vietnam. Direct and open discussions with the world’s leading experts in related fields make us reevaluate our assumptions about Vietnam’s economy, especially relating to prospects for sustained high economic growth”, commented VELP participants.

“Seldom does any public policy school in the world have a deep connection with practical issues and important influences on the national policy-making process like the Fulbright School of Public Policy and Management,” said Professor Terry Buss, US National Academy of Public Administration.