Following the establishment of the colonial administrative institutions in southern Vietnam, or Nam Kỳ, the French introduced measures aimed at utilizing the regions economic potential. Although southern Vietnam was a potential bonanza in terms of agricultural developments, before the arrival of the French, the region was dominated by traditional labor-intensive subsistence-oriented agricultural patterns. Not surprisingly, the Mekong Delta remained underdeveloped.
Although the French introduced some new agricultural technologies to boost crop output, needless to say the colonial authorities did not intend to contribute to the countrys economic development in any way. Immediate profit taking was the only priority of the French planters. For instance, during the colonial era the French mainly relied on labor-intensive technologies of cultivation so as to capitalize on Vietnams low-cost workforce.
Moreover, for the French planters in the Hậu Giang area of the Mekong Delta, productivity levels were less important as compared to overall output and profitability. Measures to raise rice yields required sizable investments in infrastructure and mechanization, while the widespread use of cheap labor allowed low expenditures though productivity levels to hit rock bottom. Instead of investing in mechanization, the French planters divided their holdings into small parcels for subsequent lease. It might be argued that management patterns of the French amounted to little more than a predominantly speculative economic model, which was counterproductive in terms of economic and social development. Moreover, the French colonial regime brought into being a stratum of intermediary traders, mainly ethnic Chinese. As a result, much of rice trade and consumer goods turnover in the South was virtually monopolized by Chinese merchants who became the countrys second most important economic force following the French colonial masters.
The French colonial authorities undertook a number of measures to develop the countrys infrastructure including the construction of major projects such as roads, railways, canals and seaports. However, these projects were supposed to ensure more efficient exploitation of Vietnams economic potential. The new transportation facilities were also supposed to encourage increased internal migration so as to guarantee a consistent supply of cheap workforce. These measures were also instrumental in boosting domestic and foreign trade. As a result, the economic and spiritual isolation of the traditional Vietnamese communities soon became a thing of the past.