Gerrymandering – Vietnamese Style: Escaping the Partial Reform Equilibrium in a Nondemocratic Regime

Abstract

Hellman’s (1998) depiction of the Partial Reform Equilibrium (PRE) presented a prophecy of despair for many transition economies. Because winners from initial economic reforms could use their newfound power to block further reform initiatives that might undermine their lucrative positions, escaping the PRE trap required the simultaneous resolution of two conundrums. Policymakers interested in furthering transition needed to both overcome opposition from the concentrated group of early winners and unite a disparate group of potential beneficiaries from future reforms into an alternative coalition. In this article, I rigorously test the theory that Vietnamese reformers managed to solve both dilemmas and to escape their unique partial reform trap through the targeted creation of new provinces in 1996. The tactic provided reformers with a majority of votes in the Central Committee, allowing them to push through a series of economic initiatives directly at odds with the State Owned Enterprise Sector, Vietnam’s early winners.

Keywords: Vietnam, Gerrymandering, Transition, Partial Reform Equilibrium, Decentralization, Provinces

JEL Classification: P2, P3