The wartime economy of South Vietnam was foremost an aid economy. This relatively underdeveloped country could not possibly have met the demands of a long and destabilizing war out of its own resources, and the glue used to hold the country together was foreign aid. Foreign aid is a concept, like charity, with which almost everyone is familiar, but its meaning in the Vietnam situation is not clear. The reason is that the United States reserved some of what it reportedly gave to the Vietnamese for its own purposes, and whether or not this kind of “gift” should be called aid is a controversial issue. In this chapter we propose a concept of aid that is at variance with officially recorded statistics and attempt to measure it by that definition. In the next chapter we shall discuss the efficiency of aid in Vietnam public finance.

10.1 Defining aid

In discussing Vietnam aid, two kinds of problems arise: (1) the conceptual problem of specifying what aid is, and (2) the problem of accounting for aid, or measuring it. The following discussion will show that neither of these problems has a neat and definitive solution.

Among other things, aid can be considered as international charity. In giving charity, the donor presumably expects no reward other than the satisfaction gained from helping someone else.