Vietnam and Sweden

I recently visited Vietnam and growing up in Sweden I was aware that Sweden was very generous in economic help to the Socialist Republic of Vietnam in the 1970s and 1980s. At least that is what I was proudly told by my school teachers. Investigating the question a bit further I found a long self-congratulatory report written by SIDA, the Swedish Government Foreign Aid Agency, which administers all foreign aid.


The World Bank has more useful data. I calculated the share of help received  from Sweden (yellow), Japan (red), and the US (blue) relative to all help received by Vietnam. The US supported South Vietnam before the fall of Saigon. Sweden supported Vietnam from 1978 to 1990. Finally, the baton went to Japan in the late 1990s.

So this looks like a picture of three generous donor countries. However, if you look at the actual amount of dollar given, the picture looks very differently. The following chart shows million US dollars in constant 2000 dollars (i.e. adjusted for inflation).

The US seems extraordinary generous to Vietnam in the 1960s. The Swedish contribution dwarfs in comparison. Sweden helped Vietnam when nobody else was interested in providing help, but in dollars not much help was provided. So at least some moral support. The Japanese contribution falls in the middle. Another way to look at the data is to consider the amount of aid given per donor-country citizen in the three eras: $110 per US citizen; $265 per Swedish citizen; $63 per Japanese citizen (inflation adjusted data, current price level). This metric makes Sweden look very generous. So I think my school teacher was right after all.

However, what I really find strange and sad is why the Swedish help stopped. Here are a few explanations:

• SIDA was full of left-wing people at the time and they probably disliked the Doi Moi reforms in 1986.  Vietnam introduced the "socialist-oriented market economy". Surely such an ideologically impure reform must have annoyed many left-wing people in Sweden. 
• I think it is ingrained in the Swedish political apparatus to help people in need, but without really caring about them. Aid should be given without strings attached. Aid is given during a number of years, then the interest just moves elsewhere when another crisis arises. 
• The right-wing parties formed a government between 1991 and 1994. The foreign aid to Vietnam dropped sharply during 1994 and 1995 and this can be interpreted as a stab in the side of the Swedish left by Carl Bildt.

I think there is truth to all three explanations. I think it teaches Sweden a bit about how to make foreign aid more efficient. Most developing countries have a much more relationship oriented culture than Sweden . When a Vietnamese official says the following, he might actually mean it.

Money is important, but what is more important is the support across our entire history with Sweden, this has nothing to do with money, other countries give us more money but we don’t have the same relationship with them (quoted in the SIDA report mentioned above).

The best foreign aid is not dropping money over a short period of time, but building a long-term relationship. When Vietnam began to recover after the Doi Moi reforms in 1986, Sweden should not have began to wind down the relationship. So much goodwill created. Why leave? The early 1990s would have been exactly the time to deepen the relationship. Swedish industry was minimally involved in foreign aid because the left-wing government in Sweden did not want Swedish companies to make a profit on the foreign aid. If the left-wing government would have cared less about ideology, Swedish companies could have been strong in Vietnam today. Hopefully, to the benefit of both countries.

Other ways to build relationships would be to provide scholarships to Vietnamese students for studying at Swedish universities. If the left-wing government in Sweden did not have such contempt for university education this could have happened. Sadly, this is not how a transaction oriented culture thinks. Towards the end of the 1990s, Vietnam was forgotten and the Swedish government wanted to be the white knight and give the money to some other country. It was never meant to be a relationship.

By the early 2010s, the right-wing government of Sweden decided to close the Swedish Embassy in Hanoi. In the last minute, they found money in the budget to keep the embassy open after all. For a transaction oriented culture, no harm was done because the embassy did not close. A relationship oriented culture thinks differently. Still, I suppose most Vietnamese had forgotten (or never heard of) the relationship that existed between the two countries some 20 years earlier.

The Japanese aid to Vietnam has exploded during the last ten years. Any visitor to Vietnam will notice a strong Japanese presence. What has happened to Japanese exports after they started with foreign aid to Vietnam in the late 1990s? The following chart shows Japanese and Swedish exports to Vietnam (translated to M USD at constant 2012 exchange rates). The Japanese export has increased seven-fold.

Swedish and Japanese exports to Vietnam (M USD, 2012 constant exchange rates)

The chart is not totally fair to Sweden, because Sweden is much smaller than Japan in population. So let us adjust the Swedish values assuming an equal population size. It seems clear to me that Japan has understood something Sweden has not.

Note: Swedish data in this chart assumes that the Swedish population is 127 million instead of 9 million.

For completeness we can also look at foreign direct investment. During the last ten years, Sweden has invested USD 14M and Japan has invested USD 5,920M.

The objective with this post was to briefly look into the issue of Swedish aid to Vietnam and what has been accomplished. My personal opinion is that Sweden should pick a few developing countries and stick with them for 50 years, build genuine relationships on different levels of society (e.g. civil servants, politicians, students, researchers, businessmen). Stay with the countries when they grow richer. Sweden should realise that a country of 9 million people should not run around trying to help the whole world. However, Sweden should also realise that it has the potential to help 2-3 developing countries. Pick a few countries and stick with them through good and bad times.