Economy of Vietnam
Until the French colonization in the mid-19th century, Vietnam's economy had been mostly agrarian, subsistence-based and village-oriented. French colonizers, however, deliberately developed the regions differently as the French needed raw materials and a market for French manufactured goods, designating the South for agricultural production as it was better suited for agriculture, and the North for manufacturing as it was naturally wealthy in mineral resources. Though the plan exaggerated regional divisions, the development of exports—coal from the North, rice from the South—and the importation of French manufactured goods stimulated domestic commerce.
Vichy France
In June 1940, the Fall of France made the French hold on Indochina tenuous. The isolated colonial administration was cut off from outside help and outside supplies. After negotiations with Japan, the French allowed the Japanese to set up military bases in Indochina. This seemingly subservient behaviour convinced Major-General Plaek Pibulsonggram, the Prime Minister of the Kingdom of Thailand, that Vichy France would not seriously resist a campaign by the Thai military to recover parts of Cambodia and Laos that had been taken from Thailand by France in the early 20th century. In October 1940, the military forces of Thailand attacked across the border with Indochina and launched the Franco-Thai War. Although the French won an important naval victory over the Thais, Japan forced the French to accept Japanese mediation of a peace treaty that returned the disputed territory to Thai control. The French were left in place to administer the rump colony of Indochina until 9 March 1945, when the Japanese staged a "coup d'état" in French Indochina and took control, establishing their own colony, the Empire of Vietnam, as a double puppet state.