Typescript prepared by Janis Vehmaan-Kreula at UNU-WIDER. UNU-WIDER acknowledges specific programme contribution from KOICA for the series of studies on 'The Practice of Industrial Policy-Lessons for Africa' and core financial support to its work programme for the governments of Denmark, Finland, Sweden, and the United Kingdom. The World Institute for Development Economics Research (WIDER) was established by the United Nations University (UNU) as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world.

Conventional wisdom holds that international trade agreements can serve as a source of external pressure and credible commitment to overcome opposition and to lock in domestic economic reforms. This belief, however, underestimates the ability of politicians not only to circumvent these pressures, but to leverage international trade agreements to advance their own policy preferences – preferences that may be highly anti-reformist. Thus, trade agreements do not necessarily induce reforms and, in certain circumstances, they can even be counterproductive. Through an analysis of aggregate data and 40 interviews with senior politicians, government officials, and state-owned enterprise managers in Vietnam, this paper illustrates these insights by analyzing the political economy of SOE reform backsliding on the eve of Vietnam's accession to the WTO.

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Viet Nam’s industrial development since Doi Moi has been a success, but only a partial one. This chapter provides an account of Viet Nam’s industrial growth since 1986 which focuses on the political economy of the country. It shows that the key determinant of Viet Nam’s industrial growth lies in the relationship between the party-state and the private sector. It also shows that the level of distrust and discrimination against the private sector—and therefore the level of industrial growth—depend on three things: the degree of trade-off between political ideology and economic legitimacy, the internal structure of the state, and the quality of the country’s leadership.