Originally posted by Stephen Anderson at Mises.org:

April 30, 1975, Saigon, South Vietnam (SV) fell to the control of the North Vietnamese army or Vietcong (VC). Remaining US citizens, SV dependents, and family members departed in haste, fearing VC reprisals. The nations of North Vietnam and South Vietnam merged into the nation of Vietnam. The outcomes for both the US and Vietnam are fascinating looking back in time.

The VC executed people who worked with the SV army and government as revenge for bringing death and destruction to the SV people supportive of the VC. Many SV city residents were transferred by VC edict to farms to help with their agriculture reform.

Many SV citizens left by boat, fearing VC execution and imprisonment for having worked with the SV army and government and US military during the Vietnam War. The SV boat people were allowed to emigrate to the US in the mid to late 1970’s and early 1980’s. They settled in many US communities, thrived through hard work and diligent saving to see it pay off for their children and grandchildren in a free nation compared to SV of 1975.

The US placed economic and trade sanctions on Vietnam on and after 1975. The history of sanctions placed on a nation by the US government yields poor outcomes for the sanctioned nation’s citizens and economy. Vietnam was a communist government and a socialist economy which greatly struggled after 1975.

Vietnam invaded neighboring Cambodia in December 1978 and completed withdrawal in September 1989, which helped neighborly nation relationships. A Paris peace conference formally ended the Cambodian conflict in 1991, which removed a major hindrance to normalizing relations with China, Europe, and Japan.

The 1989 Eastern European Velvet Revolution and December 1991 Soviet Union dissolution dissolved trade opportunities with Vietnam. Governing officials realized some economic reforms must be tried with a struggling economy. “Major components of reform included instituting a relatively liberal foreign investment law, decollectivizing agriculture, ending fixed prices and subsidies, and significantly reducing the number of state-owned enterprises.”

Agricultural output of basic foods declined for fifty years and then increased due to reforms where Vietnam was a rice exporter starting in 1989. Private sector job creation countered public sector job loss. Crude oil production grew from foreign energy company investment. Vietnam began trading in a very short time with Hong Kong, Japan, Singapore, South Korea, and Taiwan. “Growth in the gross domestic product (GDP) averaged nearly 8 percent annually through the 1990s.”

“Normalization with America’s old enemy began in early 1994, when President Clinton announced the lifting of the 19-year-old trade embargo against Vietnam.” Their economy has grown since then.

President Clinton lifted the embargo primarily to encourage cooperative efforts between the US and Vietnam to discover the fate of American prisoners of war (POWs) and missing in action (MIA) who had remained unaccounted for after the war. He also believed that improved business relations between the US and Vietnam would benefit the economies of both nations.

In July 1995, Clinton established diplomatic relations. In making the decision, brushing aside criticism of Clinton’s decision by some Republicans, McCain asserted that it was time for America to normalize relations with Vietnam.

With success, however, came a weakening of commitment to further change and renewed concern about preserving Vietnam’s “socialist orientation.”

Government-owned companies were prominent in the economy with less than half profitable, but were nearly one-third of GDP. Political leaders opposed more economic reforms and chose in 1999 not to sign a trade agreement with the US.

Large-scale public demonstrations in 2000 reflected citizens’ impatience with government corruption and slow economic growth, worsened by the 1997 Asian flu economic crisis. The demonstrations contributed to senior party leaders’ decision in April 2001 to replace Le Kha Phieu with Nong Duc Manh. He quickly took steps to curb corruption and move Vietnam into the global economy. Once again the country’s GDP experienced a surge of growth.

“From 1995 to 2013, Vietnam’s GDP averaged 6.7 percent growth annually.” US foreign aid to Vietnam has grown from $100 million per year in 2008 to more than $1 billion in 2015. “Vietnam has become one of the largest US foreign aid recipients in East Asia, especially for HIV/AIDS treatment and prevention and to encourage environmental sustainability.”

Vietnam’s inflation rate has fluctuated from 2012-2024. “The IMF projects Vietnam’s inflation to average 4.1 percent in 2024.”