Tuesday, 31 May 2011

A tale of shrimp, tennis and beer

By Neil McCulloch

This is the final part of the mini series on Vietnam.

The Old Quarter in Hanoi is an amazing place, full of colonial period houses, bustling markets stuffed with retro chic and a hive of Vespas constantly buzzing around you.  But far from the cool of Hanoi, at the other end of the country, lies Ca Mau, the southern-most province in Vietnam.  Ca Mau has none of Hanoi’s charm – in fact it is famous for only one thing – shrimp.  And yet the story of shrimp in Ca Mau tells us something very interesting about the process of economic reform in Vietnam and beyond.

As Hubert Schmitz’s blog explained, our research in Vietnam is trying to understand what drives economic reforms at the local government level.  Is it the central government pushing the provinces to improve their investment climate?  Or is it pro-active leadership by the province?  Or perhaps it is the business sector pushing for reform after investments have already been made. 

In Ca Mau we saw two processes clearly at work:
  • First, we saw the strong influence of the central government’s conversion to growth oriented policies.  The central government’s priorities in recent years have been threefold: infrastructure, access to land, and administrative reform.  And the most important ingredient for shrimp farming is not baby shrimp – it is land and roads to get the shrimp to market.  Ca Mau has land perfectly suited to shrimp farming and so the strong push from the centre was clearly one of the drivers of local reform.
  • But it is more complex than this.  For the government didn’t promote shrimp until some time after shrimp farming took off.  It was domestic investors that that first realised the money to be made in shrimp; only later did the government then start to facilitate the process.
Now the most influential organisation in town is the Seafood Association.  Interestingly, it doesn’t appear to lobby the local government for improvements in the business climate; because there is no need.  Senior members of the government are members of the association; former State Owned Enterprise managers are active in the industry.  Almost all come from Ca Mau, grew up together, drink together and play tennis together.  The business elite does not need to lobby the government – part of it is the government.  Is this corrupt?  I’ve no idea.  But the embedded relationship between business and government ensures that government both understands and responds to their needs, and that has certainly helped to boost growth in Ca Mau.

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