Vietnam's Economic Miracle?

Disclaimer: I, the author, am by no means criticizing nor praising any government or sociopolitical system. This article is the result of research conducted through official sources and major media outlets and I wish to remain unbiased.

Vietnam is probably one of the most underrated countries in the world. Not only is it stunning, but also it has plenty of potential for growth. The country, which was brought to the general public’s attention during the 1960s, has been shattered throughout history due to colonization and imperialism, being left to recover financially mostly on its own. Despite the turbulent path to its reconstruction which has not been fully achieved yet, many would argue that Vietnam did understand the assignment, and this has been very easily seen during the last few years thanks to what many people call Vietnam’s economic miracle.

What’s Đổi Mới?

During the 1980s, the country of Vietnam was still recovering from a devastating civil war and the economy was profoundly suffering. For context, Vietnam is a one-party system where most of its big reforms are decided in National Congresses. In 1986, the government decided that it was time for a renovation, and that is when the 6th National Congress took place. The outcome of this Congress was named Đổi Mới (literally meaning open door), which was a set of reforms eager to introduce Vietnam into the global market, from a planned economy to a socialist-oriented market economy.

The main goal of Đổi Mới was to comply with its production goals, as the country was underperforming due to external factors like a shortage in agricultural crops. Not only did it adapt to a liberalized world, but also it invested heavily in human capital, and this combination has launched Vietnam into the global economy.

First step: liberalization

Regardless of one’s political opinion, it is a consensus that globalization and commerce are the main features of the world’s economic reality. Unless the country in question is a hermit kingdom isolated from the main economical stream, it seems unavoidable to end up following the global tendency and that is what happened to Vietnam.

The main objective of Đổi Mới was to allow privately owned enterprises to operate in the country, leading the way to private investment and the insertion of small businesses and farmers into the free market, which would grant foreign investment to partake in the country’s economy. This liberalization of the market would allow the country to join ASEAN later on, making it a competitive global economy in the Southeast Asian region.

While it is true that the idea of a free market clashes a bit with the idea of socialism, Vietnam’s government has not detached from the idea of being a socialist country. Dr. Dao Duy Quat, who is the Deputy Head of the Central Cultural and Ideological Board Member of the Central Theoretical Council has claimed that “renovation does not mean giving up the goal of socialism which our Party and people have chosen; renovation has nothing to do with transformation, renovation is to find suitable steps, forms and measures for successful building up of socialism”. In short, the Vietnamese government sees Đổi Mới as yet another tool to achieve socialism in a globalized world.

Second step: public policies

However, a mere liberalization would not have been as effective to lift Vietnam out of poverty had it not been for the investment in human capital that came with it. Education has been one of the key means of social development, and the reforms that have been conducted have received international praise.

To solve the country’s growing demand for qualified jobs, several reforms have been put into place to improve the Vietnamese’s access to education. According to Vu Thanh Tu Anh, who is the dean at the Fulbright School of Public Policy, “Vietnam has done a pretty good job in providing universal education for its people, […] it’s easier for the Vietnamese people to take advantage of the opportunity, either brought about by domestic reform or by international trade”.

As South-East Asia approaches the fourth industrial revolution, which heavily relies on the development of nanotech, there is an increasingly growing demand for a qualified working force, and Vietnam’s approach to education as a right has attracted a lot of IT companies such as Apple or Samsung to invest in the country. This has entailed a growing service sector that is approaching Vietnam to most of the OECD countries’ GDP work division.

Covid-19

Despite the fact that the country has had some of the most restrictive Covid-19 measures in the world, mainly due to its still scarce medical resources, the economy has not slowed down as much as some of its neighboring countries. Early physical distancing measures, intense testing and the population’s compliance with government and WHO directives have helped the country keep their numbers low.

Even though the economy was already experiencing growth due to the systemic economical procedures, Vietnam’s success in the fight against the virus has made it a safe hub for foreign investment for companies willing to diversify their supply chain, avoiding reliance on unstable countries where the Covid-19 numbers keep staggering.

Not only this, the pandemic has also momentarily economically helped Vietnam, especially during the first lockdowns across the world. Remote working has ironically benefited Vietnam, which is a country located in a region where despite recent years’ service sector gaining traction, the industry sector still has a huge presence (33.72% of the country’s GDP, the USA’s is 18.64% for reference). Manufacturing being such a representative part of the country’s economy has helped in its avoidance of Covid-19 wreaking havoc in the economy, thanks to the skyrocketed demand of laptops and other remote-working related supplies partly manufactured in Vietnam.

So… How does the future look?

It is hard to tell what the future would look like. Despite all the problems that still affect the Vietnamese population, its engagement in global economics and its heavy investment in social welfare programs has made Vietnam not only economically self-sufficient to a certain standard, but also it has put the country on the tracks of globalization. Nevertheless, we should not forget that market economies have massive flaws that could very easily bring whole countries down within months. The way I see it, the key remains in the governments’ proactivity and ability to adapt to a constantly changing world, as the Vietnamese government once did with Đổi Mới.