Vietnam is widely known for the two-decade civil war back in the previous century, but times have changed drastically as now we are witnessing the improbable rise of the Vietnamese economy.
The Southeast Asian country ranks among the top 30 global economies by GDP and purchasing power parity and maintains steady growth.
But is it sustainable in the long run? Is Vietnam the next “Asian Miracle” or just a temporary phenomenon? These questions demand a thorough analysis, so let’s start from scratch and explain whether Vietnam is really on the way to become the new tiger economy of Southeast Asia.
Vietnam: Key Facts and Figures
Before we delve deeper into Vietnam’s economy, we have to add some context to the story and explain its socio-political climate. Vietnam is located in Southeast Asia and has a population of nearly 100 million. Hanoi is the capital city of Vietnam and it hosts over 7.5 million people.
Jake Gardner, a history author and the first person we call to write my essay UK, claims that Vietnam is fairly specific because more than 60% of its population still lives in rural areas: “In other words, it has the potential to combine industrialization and agriculture simultaneously.”
What makes Vietnam even more interesting is the fact that it represents one of the only two remaining communist countries in Southeast Asia. But its communism comes with a tweak since Vietnam actually represents a market-oriented economy – similar to the one we see in China.
Another interesting detail is that Vietnam used to be politically and economically isolated by 1986, which means that the country has generated rapid growth in less than 35 years.
The State of the Vietnamese Economy
What is the current state of the Vietnamese economy?
As we already mentioned, Vietnam has been growing steadily and becoming one of the most advanced economies of the region. According to the report issued by the World Bank, GDP per capita increased by 2.7 times between 2002 and 2018, whereas more than 45 million people were lifted out of poverty.
The local economy proves to have a two-fold strength because it relies on export-oriented production and massive domestic demand at the same time. This also helps the country to fend off negative impacts caused by the COVID-19 pandemic and avoid recession in 2020.
Given the fact that Vietnam is a communist country, it is natural to see substantial overlapping of public and private sectors. International Monetary Fund claims that structural problems in the land and credit markets and the still-large state-owned-enterprise sector remain obstacles to the private sector.
The country is still expected to solidify the private sector, support the inclusion of ethnic minorities, and invest in higher education so as to match the requirements of the booming markets. However, it is important to highlight that the Vietnamese economy is rather diverse as it has three major contributors:
- Agriculture
- Industry
- Services
Each of these branches adds approximately one-third to the local economy, which is a major benefit and the basic precondition for stable and long-term development.
Strengths and Weaknesses of Economy in Vietnam
Now is the right time to dig deeper into what many call the new tiger economy of Asia. Our goal is to evaluate the potential of the Vietnamese economy by identifying its strengths and weaknesses. Let’s start with the positive aspects:
- Political stability
Political stability is one of the key prerequisites for long-term economic growth and Vietnam certainly fulfills the criteria. As a one-party system, this country keeps the same political climate for decades.
- Economic stability
We mentioned already that Vietnam proved to be a highly flexible economy capable of withstanding external pressures such as the coronavirus pandemic and trade wars.
- International integration
The government of Vietnam understands the importance of globalization and so it initiated the process of international integration decades ago. The country is already a member of the ASIAN community and the World Trade Organization, while it also signed the Free Trade Agreement with the EU.
- Abundant workforce
With almost 100 million people, Vietnam makes a relatively young community and it doesn’t lack the workforce.
- Geolocation
Another thing that makes the Vietnamese economy so strong is the country’s geolocation. This seaside country is situated in Southeast Asia from which it can trade with the entire world.
It all sounds pretty good, but let’s also analyze the downsides of Vietnam and its economy:
- Slow privatization processes
Like all communist countries, Vietnam is still dependent on state interventionism. Although the situation is changing gradually, private initiatives are still not emerging as quickly as they should.
- Corruption
Corruption is still a big issue in Vietnam since many entrepreneurs have to bribe state officials in order to start their businesses and it slows down private initiatives.
The Bottom Line
Vietnam is one of the fastest-growing economies in the 21st century and it doesn’t look like slowing down anytime soon. The country’s economy deals with the coronavirus pandemic rather successfully and it capitalizes greatly on the China-US trade war, so it’s hard to predict anything else but the continuation of the growth in the following decade.
The economy of Vietnam shows clear signs of flexibility in times of uncertainty, which is another reason to believe in its future progress. The bottom line is that Vietnam may as well be the next Asian Miracle, but you are free to leave a comment if you disagree!
By Justin Osborne
Justin is a blogger from Leicester, England, UK. When not teaching his little students and rooting for Leicester FC, he loves to share his thoughts and opinions about education, writing for write my essay UK and scholarship essay writing service.