This site presents an analysis of the VietNamese government's economic policies compared to a list of 35 economic policies as prepared by student Lua Chin with the Mike P. McKeever Institute of Economic Policy Analysis (MIEPA). This study was written in December of 2019. To read the analyses scroll through this site. To learn more about the background policies, click here
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Return to MIEPA's Home PageThe study by Specialist Lua Chin is presented immediately below.
VIETNAM - LUA CHIN
This study presents a detailed study of the economic policies of Vietnam, as written by Specialist Lua Chin. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2019. Used herein with permission]
RATING SUMMARY - VIETNAM - LUA CHIN POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 2.5 7.5 15.0 50 % 2 2.0 6.0 15.0 40 3 2.5 7.5 15.0 50 4 2.5 7.5 15.0 50 5 2.0 6.0 15.0 40 6 2.5 7.5 15.0 50 7 3.0 9.0 15.0 60 8 2.5 7.5 15.0 50 9 2.0 6.0 15.0 40 10 3.5 10.5 15.0 70 11 3.5 10.5 15.0 70 12 3.5 7.0 10.0 70 13 3.5 7.0 10.0 70 14 3.5 7.0 10.0 70 15 4.2 8.4 10.0 84 16 3.5 7.0 10.0 70 17 2.7 5.4 10.0 54 18 3.5 7.0 10.0 70 19 2.0 4.0 10.0 40 20 2.5 5.0 10.0 50 21 2.0 4.0 10.0 40 22 3.5 7.0 10.0 70 23 3.5 7.0 10.0 70 24 2.1 4.2 10.0 42 25 1.5 3.0 10.0 30 26 1.5 3.0 10.0 30 27 0.5 1.0 10.0 10 28 2.5 5.0 10.0 50 29 2.5 2.5 5.0 50 30 2.7 2.7 5.0 54 31 2.0 2.0 5.0 40 32 2.5 2.5 5.0 50 33 2.0 2.0 5.0 40 34 3.0 3.0 5.0 60 35 2.3 2.3 5.0 460 TOTAL 91.5 194.5 370.0 52.6% ===== ====== ===== =====
INDIVIDUAL POLICIES - VIETNAM - LUA CHIN
1. Freedom from Internal Control 2.5
Freedom from internal control in Vietnam still gets a low score due to its control and its concerns even though people have freedom in moving and traveling in the country. The government has control of Internet and phone records and collects data of activists and bloggers openly speaking out for freedom and democracy. The Communist Party maintains a political monopoly, not allowing any challenges to threaten its leadership.
2. Freedom of Speech 2.0
Freedom of speech in Vietnam gets the lowest score due to the government of Vietnam having more and more opportunities to limit the speech of its citizenship due to bloggers and citizen-journalist who write the truths about its government and its party. Many bloggers and journalists were put in prison for these reasons.
3. Effective, Fair Police Force 2.5
Having an effective and fair police force in Vietnam gets a low score due to its corruption. The corruption is expanding from a low level to a high level in its system. This is a big headache for its leaders, and they must find to way to fix it. Many people believe it will not be fixed due to the corruption buried deep in its system in every ladder of its departments.
4. Private Property Rights 2.5
Vietnam laws have its private property rights to protect its citizensí rights; however, it is not adhered to by its leaders and authorities. (vietnamembassy-usa.org). However, there are too many civil cases involving land disputes (baomoi.com).
The property rights index measures the degree to which a countryís laws protect private property rights, and the degree to which its government enforces those laws. Vietnam scored 50 out of 100 compared to other Asian countries. (globalpropertyguide.com)
5. Commercial Banks 2.0
The commercial bank system in Vietnam is not running effectively due to corruption and old administration procedures that are not convenient for its clients. When enterprises want to borrow money, they must pay under the table to make the process go smoothly and fast to access the funds. Vietnamese do not trust the banks, so most of its people save their money and buy other properties or keep their money at home due to their fears of banks.
6. Communication Systems 2.5
Vietnamís communication systems score lower in technology compared with the other countries such as Chinese, Korea, and Hong Kong. In the richest and biggest cities in Vietnam, communication systems such as Telephone, TV, Radio, FAX, Newspapers, Magazines, and computer networks are found everywhere. However, in the poorest areas such as the rural countryside it is very hard to get modern communication such as the Internet and telephone. Most local people do not have the Internet at home due to living in remote areas, the Internet is not provided, and if the Internet is available, it is so expensive for local people with low incomes; they cannot afford to install it in their homes. They usually go to Internet stores or coffee houses to use the service when they need Internet access.
7. Transportation 3.0
Traffic and transportation in Vietnam can be like a dangerous attraction due to people not complying with any rules of the road. It is quite common to ride on sidewalks and the wrong way in one-way traffic, however, it is quite normal for local people because they know what to expect and they are very flexible in the ways they ride due to high traffic in the morning and after work periods and capacities of the roads. Hanoi and Ho Chi Minh City are facing big issues with transportation.
The main modes of transportation in Vietnam are motorbikes, bicycles, buses, taxis, vans, trains, planes, ferries, and airplanes. Access to transportation is easy acquired through online or direct purchase. It is cheap to travel in Vietnam as a foreigner, however, for the local people, it is still quite expensive due to their low incomes.
The government is working on how to improve its transportation system and to plan for the future in developing Vietnamís transportation system.
8. Education 2.5
Vietnamís education system has a lower standard compared with the American system or the European system. It follows traditional systems, however, in recent years it has experienced dramatic growth in the public as well in the private education system. Both public and private educators focus on modern teaching methods. Vietnam still has a traditional education system and students have to pay administration and tuition fees to get in from primary, middle and high school (Vietnam.oxfam.org). The State doesnít give free administration and tuition for all its citizenship. There are a lot of poor families who could not access education such as primary, middle school and high school. ( luanvanaz ). Among all its universities, there are 49 popular high-profile universities ranked in Vietnam (vnexpress.net), there are a lot of different private institutes and international schools that mostly combine two educations such as the Vietnamese program and the English program.
Vietnam has a large population of people with high degrees. Thousands of Vietnamese college graduates cannot land jobs in their chosen field, even though the nationís unemployment rate is just 2.3 percent. (Bloomberg.com)
9. Social Mobility 2.0
Social mobility in Vietnam is lagging behind its economic growth over the last decade, as the countryís poor still lack access to learn new skills and gain better jobs. About 33% of the poorest households are headed by people under age 30 enter higher income groups in 2004-2008, but only 16% did so during 2010-2014 ( English.vov.vn). A majority of laborers work in fields that require unskilled or low-skilled labor such as mining, food processing, and simple trade and hospitality services which fails to improve income and encourage laborers to improve their skills. People with high education mostly get higher income compared with those with no or lower educations. (Vietnam.oxfam.org). Although there are a lot of stable income jobs in government such as teachers, officers, police, banking systems, and others besides your degree, you also would have to have a connection or bribe the system to get into it.
10. Share of All Jobs in Small Businesses 3.5
Vietnamís small size enterprise has not contributed much in its economics, its proportion of labor decreased due to businesses getting smaller while FDI enterprises increased an average of 15 people /1 enterprise ( baomoi.com ) although itís the number of small-sized enterprises increased by .8% the average annual period of 2012-2017. Even though, the number of employees currently working in large enterprises increased by 33.8% while it is increased by only 22.1% (vnmedia.vn), (congthuong.vn)
11. Freedom from Outside Control 3.5
Vietnam has a low score in freedom from outside control due to still being controlled by China. Vietnam has a lot of help from America and Russia in opening doors to the world since1986. However, it does not depend on America or Russian. In this case, China leads other countries having the most influence and control of Vietnamís freedom such as the recent conflict of islands between Vietnam and China (vi.rfi.fr). There are a lot of factories with Chinese investors that manipulate Vietnamese economics. (vnepress.net)
12. Protection of Domestic Enterprises 3.5
Vietnam is the 21st largest export economy in the world. In 2017, Vietnam exported $220B and imported $240B made its trade balance positive. Vietnam has been opening doors to world trade and it established a lot of policies and laws to speed up the economy and catch up with the non-growing world. Due to its exports, it helps to create the most jobs, profits, and gains in trade with other countries. It also focuses on the policies and activities aimed to protect its domestic enterprises by joining many different economics organizations such as ASEAN, ASEM, APEC, and WTOÖ
13. Foreign Currency Transactions 3.5
Vietnam government leaders are very tight in its foreign currency transactions. It reforms its policies on how to handle foreign currency transactions. (thuvienphatluat.vn), (vietinfo.edu). All currency must be able to be converted into the Vietnam Dong before it can be used for any transactions in its country. Therefore, it gets a high score for foreign currency transactions.
14. Border Control 3.5
Vietnam's government has strong border control. The government continues improving its policies and laws for its borders (baochinhphu.vn). It works with other neighbors to improve its border control as well as its border boundaries (vnexpress.net). However, there are still a lot of crimes such as drug smuggling (cstc.cand.com.vn)and human trafficking(trithucvn.net).
15. Currency 4.2
Dong has been the currency of Vietnam since May 3, 1978. Issued by the State Bank of Vietnam (wikpedia.org), it is represented by the symbol "?". There are coins or notes to show the value of the dong. Since 2012 the use of coins has decreased greatly, and since 2014 coins are generally not accepted in retail, but will still be accepted in some, but not all, banks. The government keeps, develops its own currency and encourages its citizens use the Dong on a daily basis. In all, the cities that are visited by most tourists from different countries, try to use foreign currency for their service and goods. The government pushes local businesses and agents to encourage the tourists to exchange foreign currency to Dong to buy services. There are also rules established to not shop or exchange foreign currency illegally. It got high scored due to the Dong being the currency used most in the whole country, and the government approved it.
16. Cultural, language homogeneity 3.5
The 54 ethnic groups living in Vietnam divided into languages, there are 8 groups. The largest ethnic group is the Kinh ethnic group , accounting for 86.2% of the population. Almost 86.2% speaks Vietnamese in daily life. Although they have many groups of people in Vietnam, they have their own languages and cultural. Vietnam has tried to establish Vietnamese as their national language and culture for the standard by the government. However, there are still different cultural regions such as north to south. The Kinh ethnic group and different rare ethnic groups, who live mostly around and near the mountains. They have their own languages and cultures and mostly they are quite quiet and still live life like the old days, having no technology and still work and survive dependping on nature due to farming and hunting.
17. Political effectiveness 2.7
The Vietnamese Government has mainly focused on its powers by the Community Party. They have succeed in establishing rules and polices such as gun control and Internet control. They are also good at keeping track of terrorism or any group of people protesting. It is very safe here in Vietnam regarding terrorism. However, there are still a lot of conflicts and local people hold on their political views appositive to government's views. More and more local people are angry with their government.
18. Institutional stability 3.5
Vietnam has institutional stability and strength due to the ways of Communist Party of Vietnam thinking and decision making to protects its power. The Government organizations of Communist Party of Vietnam has been regarded very stable since "Doi Moi" area in 1986. Its organizations are growing and a lot of changes in leading as well as improving the administration process to serve its citizenship better. The Education Institution is stable and keeps improving its education levels to better its students. The number of newly established enterprises of the whole country in 2018 reached 131,275 enterprises, an increase of 3.5% compared to 2017.
19. Honest government 2.0
Vietnam has high record of corruption in its government due to the salary paid to its leader very low, not enough for them to feed their families. Most of honorest leaders working for the government end up a living poor standard while leaders with no honoresty living their life comfortable based on their corruptions. They use the power in their position to earn money under the table due to ineffectiveness in the administration process. Therefore, many leaders are in jails for their corruption. However, Vietnam government took steps to strengthen governance and fight its corruption.
20. Common laws 2.5
Law of Vietnam is based on Communist legal theory and French civil law. Vietnamese government leadersí reform as its laws case by case as it goes.There are a lot of laws that do not make sense and it is not fair to local people in many situations such, i.e. government can confiscate its local people's lands with no reason that makes sense. There are too many illegal land confiscations by its government.
21.Central bank 2.0
The Central Bank in Vietnam still being led by its government and still being controlled by its political control. The Central Bank in Vietnam is called State Bank of Vietnam and it currently holds about 65% stake of VietinBank - the largest listed bank by capital (Wikipedia). There a lot of center banks beside VietinBank such as Agribank, Vietcombank, Bank for Investment and Development of Vietnam, SHB, Techcombank. Its supports high-interest rates policies such as interest rate for terms of more than 1 year were kept at high levels by 9% to attract idle capital from the population (cafef.vn). This makes it hard for giving the Start-Up companies or entrepreneur starting a business success and not going into bankruptcy; pushing the country's growth slow. The ways to access these funds with their complicated administration leads to many people and entrepreneurs having difficulties to access funds and cause many frauds in the processing of administrative procedures(corporatefinanceinstitue.com) and corruption s in leaderships(centeralbanking.com). Now is a good opportunity for building banking careers in Vietnam's central bank.
22. Domestic Budget Management 3.5
Vietnam's 2018 budget deficit is in the plan assigned by the National Assembly and is lower than 0.03% of GDP, though there are still potential shortcomings in the structure of revenue and expenditure(vnexpress.net). At the October-November 2017 congressional meeting, despite the lack of budget revenue, the National Assembly still strongly estimated the budget spending in 2018 of more than 1.5 billion Dongs.
The revenue exceeded the estimates mainly from revenues from housing, land and crude oil. Therefore it is not a good resource in job creation due to revenues from the land were not stable. In December 2017, Government unexpectedly announced the sale of the state capital, earning even US $ 5 billion for an increase in revenue results and brought great achievements for Mr. Nguyen Xuan Phuc's "tectonic government" and himself.(voatiengviet.com).
Domestic budget management in Vietnam is still weak and lacking its management due to cash systems leading to many crimes of stealing money from the government budget, therefore the government is issuing new policies on how to manage cash systems more effectively (thuvienphapluat), (luatvietnam).
23. Government debt 3.5
The Vietnam government still has to rollover large debt, public debt increased from 36.5 of GDP in 2001 to more than half 62.2% of GDP in 2015. (vnexpress.net). In September 2016, the Government also signed a new loan agreement with France worth 58.4 million USD, bringing the total of foreign loans to 4.88 billion USD. The government borrowed about 20 Billion to balance the budget in 2016.
24. Economic statistics 2.1
Vietnam is still developing its economic statistics. There is still a great lack of accurate and plentiful statistics being produced to increase awareness of business opportunities. Some of the economic statistics are from outside countries such as (data.worldbank.org), (tradingeconomics.com)
25. Protection of public health and safety 1.5
Vietnam has bad management of waste, food inspection, and infectious disease and other public health issues that decrease wealth in the country. The infant mortality rate of Vietnam in 2018 16.5% decrease compared with previous years, however still higher compared with China in 2018 7.4%, Thailand in 2018 7.8%, European Union in 2018 3.319% (data.worldbank.org).
Air pollution is getting worse in two major cities of Vietnam: Ha Noi and Ho Chi Minh City due to Vietnam continuing to build more coal-fired power plants and the burning of agricultural waste outdoors, construction sites and others. (bbc.com).
26. High Wage Policies 1.5
According to the ministry, ďVietnamís labor productivity is still lower compared to other countries in the region,Ē said the Ministry of Labor. In 2018, Vietnamís labor productivity was equal to 1/30 times of Singapore. 29% compared to Thailand 13% of Malaysia and 44% of the Philippines labor productivity. (nguoi-viet.com)
Vietnamese workers still get paid VND 21,000 per hour, equal to $1.00 per hour as recorded in 2019. It is so sad for people in Vietnam who could not afford to buy goods beyond basic living necessities. Many people still could not afford the basic living necessities such as buying winter clothes, diapers for children. Some husbands of families are forced to leave their home and work other place to earn money to take care of their wife and kids. It is so embarrassing that other political party leaders can live comfortable in their deluxe houses and enjoy their deluxe hobbies with their corrupted money. (vnexpress.net)
Recently in 2016, Vietnamese government has just issued a resolution on reform of salary policy for officials, public servants, officers, armed forces and employees in enterprises. However, it is still not helping at all due to the way its leaders are leading the country.
27. Environmental Protection 0.5
Given the limited state viewpoint of environmental civil society organizations, these collaborative activities will contribute to supplementing the environment knowledge and hopefully change the opinion of those Vietnamese future leaders for the participation of civil society organizations in environmental protection (iucn.org)
There are many, projects that leaders agreed to let business projects operate that affected the local environment such as air and water source.
By indiscriminately dumping toxic waste from an aluminum refinery in Dak Nong, Vietnam into the environment, with only a small administrative fine, with only a symbolic amount of money is an example of what needs to be changed. (nguoi-viet.com)
In Tien Giang, Vietnam, people call for help due to environmental pollution. The lives and activities of many people in this area have been turned upside down due to the smog and the stink coming from a factory. (baomoi.com)
Water pollution is an arduous struggle of the people. People continue to protest, regardless of whether someone is invited to work by the police, or someone is imprisoned. This is one of the problems. (viettan.org)
Vietnam gets the lowest score due the way the government deals with its pollution problems and the way its missions in environmental protection for the local people and its country is being managed. Leaders need to improve their skills in decision making.
28. Strong Army 2.5
Vietnamís defense spending reached US $5.5 billion in 2018, an increase of more than US $500 million over the previous year, amid territorial disputes with China. Data from Stockholm World Peace Research Institute shows that Vietnamís military spending in 2018 accounted for 2.3% of GDP. Vietnam has insufficient armed forces to protect her nationís borders from attack such as China is an example.
Vietnamís plan to build iron ships to deal with Chinese fishing vessels has almost gone bankrupt. Vietnamís government is not supportive. Protecting the local fisherman is a sample of the weaken strategy to protect the country from outside powers. The VN Government has made the inside local people so angry and made them feel their rights are not recognized. The Government has ignored and not paid much attention to the many deaths of Vietnamese fishermen shot and killed by Chinese ships.
Vietnam had moved a bit from itsĒ swingingĒ position to relying on the United States towards China. The Government was only interested in protecting oil and gas fields for the benefit and survival of the ruling party.
29. Foreign Trade Impact 2.5
Vietnamís gross domestic product was $ 223.86 billion in 2017 according to the latest data from the Word Bank. (solieukinhte.com), and net import and exports came to over $1 billion, it is less than 1% compared with the GDP. We can say that the trade does not affect GDP. However, its foreign trade still gets the average scored due to bringing the variety of products to the Vietnamese and makes their life better off.
Vietnam has more than 200 trading partners including 28 export markets and 23 import markets with a turnover of over 1 billion USD. 2017 is the second consecutive year that Vietnam had a trade surplus of goods, with a surplus of 2.92 billion USD higher than the surplus of 1.78 billion USD in 2016. (vietnamexport.com)
The United States was the largest export market of Vietnam, followed by the EU market, China, ASEAN market, Korea. China remained the largest import market of Vietnam, followed by the Korean market, ASEAN Market, Japan, EU market, USA. (baomoi.com)
30. Management of Foreign Currency Budget 2.7
The management of foreign currency budget is getting better. With the appropriate policies to make the most of foreign investment resources, foreign investment activities in recent years have contributed significantly to Vietnamís economic growth, contributing to improving the balance of international payments, (tinnhangchungkhoan.vn).
Considering January to September, 2019 Vietnamís exports increased to $23.0 billion, while imports rose to $22.5 billion, there is a little surplus. According the figures above, Vietnamís trade surplus narrowed to $5.9 billion. Vietnamís balance is getting smaller comparing it with the last periods. (tradingeconomics.com)
31. Layers of Collective Action (2.0)
Vietnam is run by the Communist Party of Vietnam. The Communist Party of Vietnam was established and trained by President Ho Chi Minh, who has led the Vietnamese people to carry out successfully the August Revolution and establishing the Democratic Republic of Vietnam (Wikipedia). Due to the Communist Partyís system of governing, Vietnam is not greatly influenced by the voice of its own citizens. Majority Rule is a passive process that is used in legislatures until proposals are either approved or voted by the Communist Party.
Most elected Communists Party representatives nowadays, do not represent their Vietnamese people. These selfish representatives are corrupt and only protect their benefits regarding the Communist Party. The Communist Party of Vietnam (CPV) and government leaders have acknowledged growing public discontent with corruption.
The authorities periodically prosecute highĖprofile officials and businessmen for malfeasance (freedomhouse.org). Mr. Ding La Thang: The CPV Central Committee voted Thang out of the elite 19-member Politburo on May 7, 2019. Three days later, it was confirmed that he had also been fired from his position as de facto mayor of Ho Chi Minh City. Anti-corruption in Vietnam is tinged with politics (vi.rfi.fr).
Vietnamís Leaders have a history of appointing their family members to the leadership of organizations such as Ms. Nguyen Thi Kim Tien - Health Minister of Vietnam Government, appointing her own son, Mr. Hoang Quoc Cuong to the Vice-Chair of the Pasteur Institute. Then Mr. Nguyen Truong Son, Deputy Minister of Health of Vietnam appointed his son, Mr. Hoang Quoc Cuong to be the Deputy of Pasteur Institute.
Ms. Nguyen Thi Kim Tien is the granddaughter of Mr. Ha Tap, the third General Secretary of the Communist Party of Vietnam (nguoi-viet.com). This shows that the Vietnamese are not given a voice and the right to influence their governmentís choices. There are a lot of good opportunities for foreigners and entities that want to coach the leadership to be good leaders.
32. Pro-business Climate (2.5)
The Majority of the nation is in poverty, almost all of Vietnamís population has focused on their familyís survival. They do not have opportunities to join social activities as well as be educated in strategies for the future. The people of Vietnam did not see the importance of how the environment affects their local life. Until things happened, did they realize that the environment is important and affects their sources to survive (en.wikipedia.org). An example is 2016 Dead Fish Disaster in Vietnam that spread to the attention of the U.S. Congress (voatiengviet.com).
People realize that all the economic policies that have authorized local as well as national government leaders to make policies have led them into going in the wrong directions. By encouraging, and signing a lot of business agreements that allow foreign countries to come to Vietnam to do business have affected Vietnamís environment and pushed poor local residents into getting diseases such as cancer. Cancer has been increasing than before.
Weather and climate changes have occurred due to many large foreign manufactories operating unfriendly practices with the environment and not caring about the lives of the local people.
There are good opportunities for foreign companies that want to do business in Vietnam such as ďGreen BusinessesĒ that manufacture healthy products, discharge clean water. Green Business will get a lot of support from the local people and make a lot of profits by raising the opportunity of living a healthy life for the Vietnamese. All Vietnamese want to enjoy a long life.
33. Government Enterprises (2.0)
The government enterprises generated about 28% of GDP for the period 2006-2010 while Government enterprises accounted for 45% of total investment. Compared with the private enterprises' sector which generated 46% of GDP while it accounted for only 28%.Ē bao moi.comĒ ďvneconomy.vnĒ. In 2018, total revenue reached VND 193,510 billion, total interest reached VND 26,425 billion, contributing 26-28% of the countryís GDP ďvneconomy.vnĒ
34. International Security Agreements (3.0)
Vietnam has established a strong relationship with the United States after the Vietnam-U.S. War. Vietnam has also joined as a member with various other countries in its region such as ASEAN, ARF, and Asia-Pacific Economic Cooperation (APEC) to increase security when defense incidents occur and to help each other to grow economically.
In recent years, China has become very aggressive in the Pacific Ocean region. China has tried to take over the Truong Sa Island of Vietnam. Therefore, besides Vietnam needing help from the United States, Vietnam has also connected with the Philippines and Korea to further strengthen their friendship, cooperation, trust, and mutual understanding with the Army and Navy of Vietnam.
35. Protection of Domestic Enterprises from Government Mandated Costs (2.3)
The Vietnamese government has established many economic policies encouraging and providing an advantage for Chinese enterprise to enter and invest in Vietnamís economy. Vietnam has provided favorable visa and investment policies towards China.
Recently, Chinese investors have taken over the real estate market in tourist areas especially real estate along the Coast of Vietnam. Due to the demand for properties in tourist areas from international investors, local prices have risen greatly. Chinese investors are buying a lot of local properties from local people in Cam Ranh Bay, Nha Trang, Van Phong, and Phu Quoc. This has caused real estate prices to rise to a degree in the local market that local consumers cannot afford to compete anymore. It is hard for local enterprise to compete with Chinese enterprise in the cost raising crisis.
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