Post World War II developments in the four Mekong economies of Vietnam, Laos, Cambodia and Myanmar show similarities and differences. All four emerged from colonialism in the late 1940s/early 1950s with varying qualities of physical and social infrastructure. Except for Myanmar, all experienced war and conflict and by the mid-1970s all adopted some form of socialist central planning. Vietnam and Laos implemented Soviet-style central planning. Myanmar embraced isolationism from the West, with its economy under central government control in the hands of the military. Meanwhile, the Khmer Rouge in Cambodia enforced a severe form of central planning, resulting in the destruction of all business and market activities.

By the end of the 1980s, four ‘lost decades’ of economic development left the living standards of Mekong 4 citizens considerably below those of the fast-growing outward-looking East Asian economies. With the collapse of the former Soviet Union and the withdrawal of Vietnamese troops from Cambodia in 1989, the Mekong 4 embarked on market-oriented reforms to take advantage of the benefits of trade and investment with the world economy. Vietnam implemented Doi Moi (or ‘Economic Renovation’) in 1989; Laos adopted the NEM (New Economic Mechanism) in 1990; Myanmar began opening up its economy to foreign investment and tourism in 1988, and Cambodia embarked on serious reforms and resumption of relations with international financial institutions in 1993. All four economies became members of ASEAN. With the exception of Myanmar, the initial successes of market reforms soon became evident. Although starting from a low base, Vietnam’s average annual GDP growth (close to 8 percent per annum) prior to the Asian financial crisis of 1997 exceeded that of the ASEAN 5 and those of Laos and Cambodia were approaching the ASEAN 5. 1 Inflation rates before 1997 were also declining rapidly. Furthermore, economic growth