The Vietnam War affected the US economy during the early 1970s by an increase the government's military spending, which caused several problems. The war affected the production of goods and factories were producing things for the military instead of consumer goods. spent within the militar?? however. TimesMachine is an exclusive benefit for home delivery and digital subscribers. Professor Fischer had some interesting things to say about the Korean War: "In its economic impact the Korean War was similar to the world wars that had preceded it. Although Vietnam is officially a Communist nation, about 40 percent of the economy is capitalist, and the government is making great efforts to encourage private foreign investment. As in foreign and military policy, something has been learned. Until French colonization in the middle of the 19th century, the economy of Vietnam was mainly agrarian and village-oriented. The result was the experiment in controls: an experiment sufficiently successful, or certainly not unsuccessful, to give a similar venture a far higher probability in the future than would ever have seemed likely five or 10 or 15 years ago. In any case, that was the great blunder —the failure to recommend higher taxes in early 1966. Vietnam's economy after the war (1975-1986) After the war, the Northern and Southern Vietnam were unified as one state: the Socialist Republic of Vietnam. Socialist planned economy played dominant role in the economy. In good Dart because of its failure to finance the war, the United States Government let the economy run away in the late nineteen‐sixties. Government spending and debt remained in check and bank capital rules were strengthened. The economy began the fourth quarter on a robust footing according to available data. Vietnam Economic Outlook. The Vietnam War had several effects on the U.S. economy. In the decade after the end of the Vietnam War in 1976 the economy deteriorated. As Kemf puts it: "More forests have been lost in Vietnam since the US/Vietnam war ended in 1975 than during it. Its economy is expected to grow 2.4% … Estimates of the number of people killed in Indochina range from two and a half million to more than four million. The Vietnam War was fought for civilians, by civilians and among civilians – and the majority of casualties were civilians. larger pay for smaller tots forces, partly to attain th?? While it is probably too much to say that Vietnam wrecked the old monetary system, it was one of the wreckers. The war was never big enough to clobber this nation's economy if properly financed. The Government is silent pending consultation with other countries that may want to help. A Republican Administration took office in early 1969 at the peak of the inflationary boom. He labeled it a "noble cause' and During the last half of 1959, VC-initiated ambushes and attacks on posts averaged well over 100 a month. b. Vietnam Since the War (1976-Present)The war in Vietnam finally ended in 1975, when North Vietnamese troops captured the South Vietnamese capital of Saigon. The big money and the big strain are long since past. Without the winding down of the war it would have risen sharply for reasons of inflation alone. rate prior to the war. In December and January President Johnson declined their advice. Despite the success of many Kennedy and Johnson economic policies, the Vietnam War was a important factor in bringing down the American economy from the growth and affluence of the early 1960s to the economic crises of the 19, American history and world history can be found at historycental- History's home on the web. Furthermore, the court prohibited slaughtering water buffalo and cattle and held many agriculture-related ceremonies… The struggle for Vietnam was one of the 20th century’s great human tragedies. And Congress did not enact it until July, 1968. The United States experienced an increase in the national debt as a result of the Vietnam War. And the war as a whole at its end, measured by the Defense Department's definition of “incremental cost,” was costing about $6‐billion. Then there is postwar aid in Indochina. Before the US-Vietnam war (1959-1975), Vietnam had a highly centralized economy based on Marxist economic planning. The Stalinist economic system the North had adopted stagnated the economy and by the mid-1980's the economy of Vietnam was devastated. The war, and its economic handling, also played a part in the eventual collapse of the world monetary system established at Bretton Woods, N.H., a quarter of a century ago, though this might have happened anyway. Massive government spending stimulated the economy. The lesson, of course, is now commonplace. Interest rates rose, restricting the amount of capital available for businesses and consumers. I has been spent on muc?? The classic restraint produced a recession and unemployment—a fairly mild recession but still deeper than anybody had planned — and yet inflation continued. Despite this, the Vietnam War had a negative impact on the United States economy. After World War II, Korea and Vietnam, war-inflations were not followed by a decline at all. Vietnam War - Vietnam War - The U.S. role grows: By the middle of 1960 it was apparent that the South Vietnamese army and security forces could not cope with the new threat. Vietnam's army overran neighboring Cambodia in 1978, driving the genocidal Khmer Rouge out of power. The funds were going overseas, which contributed to an imbalance in the balance of payments and a weak dollar, since no corresponding funds were returning to the country. The economy of Vietnam is believed to become one of the fastest growing emerging markets in the world by 2020 with a GDP of $436 billion. That has happened at other times and in other places. The economic consequences of the Vietnam War were among the major factors in creating the economic difficulties faced by the United States during the 1970s. The best present estimate is that the relatively small military savings from the ending of the war will be greater than the even smaller incremental aid costs to follow the end of the war. But insofar as economic analysis can judge and has judged, the answer is yes, the worst could have been easily avoided. Another great aspect of the book is that it puts the Vietnam War into the context of the Cold War and the U.S. national-security state. Leading Industries Of Vietnam The economy of Vietnam is mainly reliant on foreign direct investments in order to promote growth. And they, partly as a result, expressed no enthusiasm for a tax increase. Because of post-war lumbering operations (the rebuilding of 10 million homes, schools, hospitals, roads and irrigation systems), the relentless collection of firewood, forest fires and centuries-… After the war, Vietnam adopted a broad economic trend called 'Doi Moi' (Renovation) to recover from the ravages of the war, the loss of financial support from the Old Soviet Bloc. In addition, military expenditures, combined with domestic social spending, created budget deficits which fueled inflation. It began winding down the war rather soon. As Swanson points out, These points stand out in the process of reflecting on the economic aspects of the long agony. Few consumer goods were being produced and this was affecting the American economy greatly. The winding down was simply an aid in fiscal restraint and was not the “cause” of the subsequent recession, as some Republican politicians (including President Nixon) occasionally implied. All Rights Reserved. The United States pays $22 billion a year in war compensations for Vietnam veterans and their families. Hundreds of civilians died from unexploded landmines and bombs – many of the bombs lay hidden underwater in rice paddies. Vietnam's economy after the war (1975-1986) After the war, the Northern and Southern Vietnam were unified as one state: the Socialist Republic of Vietnam. Economic Effects of the Vietnam War A common modern belief is that war leads to a positive outcome within the United States economy. Independently of that, however, it put classic fiscal and monetary clamps on the economy. In the next year 2,500 government functionaries and other real and imagined enemies of the Viet Cong were assassinated. Which of the following best describes the effect of the Vietnam War on the US economy? goal of a volunteer army. The U.S. had poured some $168 billion into the war, but the real cost of the conflict was its impact on the economy. Depending still on details, the annual United States aid contribution — including our share of the roughly $2.5‐billion five‐year amount for North Vietnam contained within the over‐all figure of $7.5‐billion — is not likely to be a great deal larger than the amount of foreign aid that was being spent annually in South Vietnam anyway. While the “peace dividend” concept has always been a little ambiguous, it is clea?? c. The billions that the United States spent devastated the US economy … The funds were going overseas, which contributed to an imbalance in the balance of payments and a weak dollar, since no corresponding funds were returning to the country. Basing on the current dollar value, the Vietnam War cost the equivalent of about $1 trillion. Current economic risks relate to geopolitics, trade policy uncertainty, and domestic reform implementation. Anti-war sentiments and dissatisfaction with government further eroded consumer confidence. The first war really covered by photograph is the Civil War, but it is a small number of still photographs that have to be either studio posed or that take a long time to produce, whereas in the Vietnam War you get a proliferation of photographs from the field in a way you never have before. Occasionally the digitization process introduces transcription errors or other problems; we are continuing to work to improve these archived versions. There is no present prospect of a massive postwar aid and reconstruction program in Indochina that will even equal the last, reduced cost of the war, even though there will be a significant program. https://www.nytimes.com/1973/01/28/archives/what-vietnam-did-to-the-american-economy-worsening-payments-deficit.html. Explore our complete time lines of major events in American history as well as World History. Vietnam is a socialist country operating under the leadership of the Communist Party. The new budget for fiscal 1967 included $10‐billion for the war, though the final figure turned out to be $20‐billion, an error of 100 per cent. The war had “begun,” in the sense of the introduction of American combat troops in force, in Suly, 1965. Economic performance since 1986 has justified the policy of relaxation of central control, the challenge faced by Vietnam has been the maintenance of rapid economic growth and integration into the global economy. Vietnam has minimised the economic damage from Covid-19 and is the only country in South East Asia on track for growth this year. Vietnam is one of the world's poorest countries, having suffered from years of war (1940-89) that damaged its economy and basic infrastructure . that total defense spending has remained remarkably stable in dollar terms for five years as the war woun?? An even greater number were maimed, disfigured, orphaned, displaced or forced to flee as refugees. Of course, a better system may emerge from the wreckage. But, more than that, the war tended to sour the climate of international monetary negotiation, and it certainly did not help financial psychology. According to this estimate, it will be 70% the size of the UK economy by 2040. President Ronald Reagan sought to reinterpret the history of the war. Vietnam War (1954–75), conflict that pitted the communist government of North Vietnam and its allies in South Vietnam, the Viet Cong, against South Vietnam and its principal ally, the United States. President Nixon first disclosed this figure in a message to Congress last February. The Vietnam War had several effects on the U.S. economy. Even the massive recent bombing of North Vietnam was costing “only” about $2‐billion at an annual rate. The following year, the Communist leaders of North Vietnam reunited the two halves of the country to form the Socialist Republic of Vietnam (SRV). The requirements of the war effort strained the nation's production capacities, leading to imbalances in the industrial sector. In doing this, Swanson is able to show how America continues to live with the consequences of the Vietnam War even today — and with the forces that led to U.S. involvement in the war. French colonizers, however, deliberately developed the regions differently, designating the South for agricultural production and the North for manufacturing. They also introduced a series of changes designed to transform Vietnam into a socialist society. Despite rising trade tensions and volatility in emerging economies throughout 2018, Vietnam’s economy saw broad-based growth and low inflation. First, a brief recall of the Great Botch of 1966. Factories that would have been producing consumer goods were being used to make items from the military, causing controversy over the government's handling of economic policy. The President's economic advisers, then headed by Gardner Ackley, were increasingly suspicious of the Defense estimates. Everything is relative. The beginning of the Botch came in December, 1965, with a gross underestimate of the cost of the war for the fiscal year 1967 (from mid‐1966 to mid‐1967) by the Defense Department under Robert S. McNamara. Vietnam was not growing enough rice under collectivized agriculture to feed itself. See the article in its original context from. Millions of acres of forest had been defoliated by the toxic Agent Orange. © 1996-2020 Historycentral. Finally, the war — or more precisely the aftermath of its poor economic handling — has left a major legacy: a new and probably lasting, though intermit? Vietnam economy grows nearly 7% on trade war tailwinds Manufacturing exodus from China propels one of fastest boosts in region Shipping containers are stacked at a port in Haiphong, northern Vietnam. This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996. If the economy runs away again, for whatever reason, controls will be a lively possibility for any Government in power in the United States. But, whetter applied at the wrong time or the right time, controls are now part of our heritage and are not automatically viewed as an ogre. If he had asked for taxes to pay for the war, the response in Congress might have been to scuttle the domestic legislation instead. There is a whole book to be written about it. But officials continue to say that the “ball park” figure is $7.5‐billion, spread over five years, for all of Indochina, including contributions by others than the United States. down, to the range of $75 billion to $77‐billion. To preserve these articles as they originally appeared, The Times does not alter, edit or update them. Most of the country’s rail infrastructure, bridges, roads, and canals were destroyed. On the other side of the ledger, there is almost no “peace dividend.”. The Vietnam War damaged the U.S. economy severely. November 17, 2020. The President began to get a more accurate picture of the cost of the war by March. By coincidence, the economy at that time was approaching “full employment” after a long period of steady and noninflationary expansion, with idle resources of men and machines gradually decreasing. budget itself—but not main ly for expensive weapons. Vietnam War (1960–1975) CausesMilitary and Diplomatic CourseDomestic CoursePostwar ImpactChanging Interpretations Vietnam War (1960–75): Causes Most American wars have obvious starting points or precipitating causes: the Battles of Lexington and Concord in 1775, the capture of Fort Sumter in 1861, the attack on Pearl Harbor in 1941, and the North Korean invasion of South Korea in … Re: Economic Causes of the Vietnam War As far as I know, nobody else has examined this topic, as I did in 1977 in the course of research for TWTWW. In addition, the government's military spending caused several problems for the American economy. We could not have had zero inflation, but we need not have had anything like the 6 per cent inflation we final ly got. But the main legacy is probably domestic. Depending on one's philosophy, and the evolution of that philosophy over these trying years, it could even be a happy legacy from the long trauma of Vietnam. In the 1980s. In peaceful times, soldiers were sent home to do farm work. It is to be hoped that, as in the current experiment, they would be imposed after and not before the more fundamental restraints have been applied. This had an even worse impact on the balance of payments. This in turn ultimately led to the devaluation of the dollar and the end of the Bretton Woods system. Indeed, over the past decade, Vietnam has enjoyed one of the highest economic growth rates in the world. In October, industrial production gained steam on a stronger manufacturing sector, while retail sales expanded notably and exports surged. Though the plan exaggerated regional divisions, the development of exports--coal from the North, rice from the South—and the importation of French manufactured goods stimulated internal commerce. They knew that the economy was about to bump up against its full‐employment ceiling, that inflation threatened and that a big budget deficit was the worst possible medicine. ?, willingness of the United States Government to use in essentially nonwar conditions direct controls over wages and prices. But, in polling people like key members of Congress and businessmen on whether they would support higher taxes, he never really told them how much the war was costing and would cost. Civilization in Vietnam had been built on agriculture. As for the “peace dividend,” as war spending has declined the dividend has almost entirely bee?? Mighthave‐beens are the bane of history. Just as important, inflation permitted to happen in the United States when the war was not paid for was important in eventually swinging the American trade balance — exports and imports — into massive deficit after years of regular surplus. The Vietnam War left Vietnam in physical and economic ruins. It is still largely an agricultural economy, with 72 percent of its workforce engaged in that sector. Research our special sections on diverse subjects ranging from presidential elections to naval history. Vietnam War and the Economy. • The Vietnam War was unlike World War II and the Korean War, as it ramped up slowly with American troop deployments starting in 1965. Thus, economic development is the nation's highest priority. WASHINGTON—The war in Vietnam produced what is widely recognized as the greatest blunder in Government economic policy since World War II — a blunder whose effects have still not been entirely eliminated. Still, a lasting lesson is likely to have been learned. We shall never know for certain whether, had President Johnson proposed and Congress enacted a payfor‐the‐war tax increase of some $10‐billion in mid‐1966, the ensuing distress of the American economy could have been largely avoided. But they are very large relative to some of the recent domestic budget cuts—for example, about $200‐million for rural electrification loans—which have caused great Congressional protest. Whatever aspect of history you wish learn about, you will find it at Historycentral.com.
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