Devastated by a decade of war, Vietnam was finally reunified when the South Vietnamese government surrendered to the advancing northern troops and U.S. troops left the country permanently. Following the independence from France in 1954, the two Vietnams followed different paths. The North with a communist government led by president Ho Chi Minh (胡志明) and the South ruled by American-backed President Ngo Dinh Diem (吳廷琰). However, when Vietnam was united, the government of North Vietnam imposed its communist system of development in the South as well, eradicating the market oriented system. For the next ten years, the economy of Vietnam declined drastically. In 1986, the government implemented reforms and the economy was gradually transformed into a more open, market-oriented system. In 2003, Vietnam's per capita GDP reached US$420 per year and was removed from the list of Least Developed Countries (LDC). As a transitional economy, Vietnam followed a similar path with China and attracted many foreign investors due to its low wages. Unfortunately, despite Vietnam did not become a success story like China other countries in Southeast Asia even though it achieved a high economic growth rate and Foreign Direct Investment (FDI) capital inflow.
2. Isolation and Reintegration.
Feeling threatened by the Pol Pot regime, Vietnam invaded Cambodia in 1978, installed a puppet regime and "freed" Cambodia from the Khmer Rouge. This action was condemned by many countries including China, which attacked Vietnam as a punitive measure. Many western countries followed a previously imposed embargo by the U.S. Since then, Vietnam became internationally isolated until it withdrew its troops from Cambodia in 1989. During the settlement of the Cambodian conflict in the 1991 Paris Agreements, Vietnam established diplomatic and economic relations with ASEAN as well as most countries in Western Europe and East Asia.
