Economic Growth And Policies Of Vietnam
In the Asian Development Outlook 2009 (ADO), the annual ADB publication released yesterday, that forecasts economic trends in Asia, the ADB predicted that: "In 2010, expected increases in remittance inflows and incomes will speed up growth of private consumption. Improvement and consolidation of global financial conditions will bring about an upturn in FDI inflows and foreign-financed investment. At the same time, growth of public consumption and domestically financed investment will moderate due to the decline in budget spending and tighter bank credit"
Also according to the forecast by the ADB, Vietnam's average inflation will stand at 10% this year and 8% in 2011.
These forecasts are based on Vietnam's somewhat tightened fiscal policy with the fiscal deficit target at 8.3% of GDP, and the tightened monetary policy with the target credit growth of 25% this year.
In the report, the ADB stressed that substantial and timely policy responses helped Vietnam overcome the global recession in 2009. However, the economic stimulus measures also resulted in devaluation and inflation pressures.
Policies to focus on macroeconomic stability rather than rapid growth, and efforts to improve the economy's efficiency are essential for Vietnam's sustainable development as a middle income country, said the report, adding that: "Investor confidence is the key factor for Vietnam to attract large inflow of foreign direct investment and to ensure that the capital account surplus is larger than current account deficit so as to result in the increased foreign exchange reserve. As Vietnam will implement the new Socio-Economic Development Plan 2011-2015 as a middle income country, putting focus on efficiency will enable Vietnam to be integrated deeper into the regional and global value chains".
The report noted that the Vietnamese Government took several steps to improve governance and the business environment in 2009. The ongoing efforts under the Project 30 to reduce administrative procedures are welcomed as a policy on right direction to improve efficiency.#p#分页标题#e#
The article I have chosen, analyzes Vietnams fiscal policies through the predications of the Asian Development Bank (ADB). The predictions made have come out after Vietnam has announced the implementation of a stricter fiscal policy, after the effects from the global recession were felt in the Vietnamese economy. This internal assessment will focus on the affect the new government policies, with particular emphasis on fiscal and monetary policies, and the effect it will have on aggregate demand as well as touching upon the factors of production.
Economic growth is the key element in this article, and the affects of what it will have on aggregate demand are evident both over short term and long term. The first paragraph of the article talks about how the increase in incomes over the long term will lead to an increase in private consumption. Private consumption is part of AD (Aggregate demand) which is defined as AD= C+I+G+(X-M) where C is consumption, I is investment, G is government spending and X is total exports and M is total imports. The (X-M) stands for the net export. An increase of the overall private consumption over both short term and long term will mean that the AD curve will shift to right.
Aggregate demand is a very relevant theory in relation to this article as article refers to both fiscal and monetary policies. Fiscal policies is defined as a set of government policies relating to its spending and taxation rates.  Monetary policy is defined as the set of official policies governing the supply of money in the economy and the level of interest rates in an economy. 
Vietnam is attempting to reduce its fiscal deficit, which suggests that the government expenditures is greater then the total income received from tax. A higher taxation will cause a decrease in consumption, as consumers will now have less money to spend on goods, however if the government decreases government spending in its attempt to restore its fiscal deficit. A decrease in government spending could possibly in the long-term lead to an increase in AD. It is important to specify which taxes are increased, if taxes are imposed on imports, this could lead to a better affect as more money will be spent on domestically produced goods rather then foreign produced goods or services as with the implementation of tariffs the price would be higher, and the consumer would opt for the cheaper product (substitution effect).
Average Price level
Aggregate demand drops from D1 to D2 due to less consumer expenditure, and because the availability of credit has become stricter.. SRAS (Short Run Aggregate Supply) remains the same over short term. However of the long term this could shift as there could be an increase in wages. The reason aggregate is being used is because we are looking at the economy as a whole, and not one particular sector.#p#分页标题#e#
Aggregate demand will recover to its "moderate" level, as the effects of the fiscal policies start to work over the long term. That is why I have used LRAS( Long Run Average Supply).
A shift in the AD curve is identical to the determinants of demand. The biggest factor in this case will be changes income, and with national incomes having most probably decreased during the recession.
Vietnam is looking to increase the total output, as it is "putting focus on efficiency". Suggesting an improvement in the factors of production. The economic stimulus package as well as FDI's  will help in stimulating economic growth. Increased efficiency would mean that Vietnam would be closer to reaching the maximum of goods and services that can be produced by its economy. As it is producing within its PPF (point A) and move to point B with increased efficiency and making better use of its resources.
The future is bright for Vietnam, as it has managed to survive the recession, and is now implementing policies to encourage further growth, with some restrictions to avoid risk, such as the implementation of stricter credit regulation. The monetary policy Vietnam will regulate the overall growth over the coming years, and could eventually lead to a overall shift of the PPF to the right. The mix of demand side and supply side policies could cause disruption, so a level balance between the two must be found for market forces to act accordingly. Governments and both the people of Vietnam will be able to look forward to their country prospering from economic growth  to development  .