Making a market: The institutions supporting Ho Chi Minh City's urban land development market (Vietnam)

After a decade of reforms in transition economies, it is clear that building markets is not as simple as we originally thought. The same reforms applied in different contexts have produced a variety of economic outcomes. Traditional mainstream economics had ignored the role of institutions, assuming that innate individual interest in profit would be sufficient in unleashing market activity once legal norms were established to reduce the threat of property expropriation. There is growing recognition in international development policy circles that a key reason to the unevenness in market development in terms of growth and domestic investment must lie in differences in institutional contexts; This dissertation examines how a private land and real estate market in Ho Chi Minh City, Vietnam emerged where many supposed market fundamentals are missing. It was a mystery to some how domestic private land development firms could have emerged. With an undeveloped legal system and some of the weakest property rights amongst the transition economies, foreign capital flight after the Asian currency crisis in 1998, an undeveloped banking sector, and constantly fluctuating and interventionist government policies, Vietnam should have been a nightmare for any private business. And yet, the bulk of annual new housing is now supplied by the private sector. This study asked how these firms emerge, invest, and operate.; I hypothesized and found that a complex set of institutional factors shaped and supported agents to engage in new economic actions and that is one of the main reasons that Ho Chi Minh City's real estate market has been able to develop rapidly. This case challenges our current understanding of what are essential market institutions. I propose an integrative model for understanding how the institutional factors I found worked together and the key elements to developing a market.