The State of Vietnam became an independent nation when conferees at Geneva in July 1954 partitioned the former French colony of Indochina. It began as a monarchical state, but that condition lasted only fifteen months, until its emperor, Bao Dai, was ousted in a plebiscite by Ngo Dinh Diem in October 1955. From this referendum, which was “a test of authority rather than an exercise in democracy” (Karnow 1984, p. 223), emerged the Republic of Vietnam. The republic survived as a nation for about twenty turbulent years, until April 30, 1975. This chapter traces the rise and fall of an economy shaped by the most expensive foreign aid program in history and buffeted by the tides of a very long and destructive war.

The beginning economic assets of the new nation can be listed quite simply: an adaptive and industrious population of about 11 million, a number of highly productive foreign-owned and -operated rubber plantations, much potential in rice production, and not much else. At the onset of World War II, throughout Vietnam there was a prosperous rice economy able to export 1.2 million metric tons out of its production of 7.7 million tons, or 1,025 pounds of rice per person (Fall 1963, p. 292). By contrast, in 1956 the South portion reported rice production of 2.6 million tons, or 525 pounds per person, and exports of 162,000 tons.