Blink and you might have missed it, but Vietnam has been building an incredible economic story over the past couple of decades. Often overshadowed by China, it is now starting to outpace it’s neighbour to the north.
Since 1990, Vietnam has seen GDP per capita increase more than 350%. By comparison, India has grown ~250%, Bangladesh ~200% and Thailand and Indonesia ~150%. The growth rate does mask the fact that Vietnam was starting from a lower base than many of its South-East Asian neighbours. Now that it has caught up (Vietnam’s GDP per capita is a bit higher than India and a bit lower than the Philippines), this article explores what Vietnam needs to do to keep growing.
Vietnam’s economic growth story looks remarkably similar to China. Transitioning away from the Soviet-style centrally planned economy, opening up to the West, embracing private property rights and private enterprise, and privatising state-owned enterprises. The two Asian neighbours emerged in the mid-20th century as communist economies with authoritarian governments, but by the start of the 21st century they looked more like capitalist economies still with authoritarian governments.
The task for Vietnam is now to continue to follow in China’s footsteps. To eliminate absolute poverty and continue growing domestic GDP per capita until the economy can be more consumption-driven rather than export-led and ultimately, Vietnam can reduce reliance on manufacturing for western companies as their own homegrown companies emerge.
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