The Story Of Vietnam’s Economic Miracle: Reducing Poverty Level From 58% To 10% In 13 yrs (pic & video)
A mere 30 years ago, the country was one of the poorest in the world. How did this southeast Asian nation grow to become a middle-income country?
When the 20-year Viet Nam War ended in 1975, Viet Nam’s economy was one of the poorest in the world, and growth under the government’s subsequent five-year central plans was anaemic. By the mid-1980s, per capita GDP was stuck between $200 and $300. But then something changed. In 1986, the government introduced “Đổi Mới”, a series of economic and political reforms, and steered the country to becoming a “socialist-oriented market economy”.
Today, Viet Nam is one of the stars of the emerging markets universe. Its economic growth of 6-7% rivals China, and it exports are worth as much as the total value of its GDP. Anything from Nike sportswear to Samsung smartphones are manufactured in this ASEAN nation. Such is the success of the country, Sheng Lu, an assistant professor at the University of Delaware told the Financial Times that there are few spare workers or production facilities left.
So how did this growth miracle happen? According to analysts from the World Bank and the think tank Brookings, Viet Nam’s economic rise can be explained by three main factors: “First, it has embraced trade liberalization with gusto. Second, it has complemented external liberalization with domestic reforms through deregulation and lowering the cost of doing business. Finally, Viet Nam has invested heavily in human and physical capital, predominantly through public investments.”
Regarding the first factor, the analysts point to the various free trade agreements Viet Nam has signed in the last 20 years. In 1995, Viet Nam joined the ASEAN free trade area. In 2000, it signed a free trade agreement with the US, and in 2007 it joined the World Trade Organisation. Since then, further ASEAN agreements followed with China, India, Japan and Korea, and just this year, the amended Trans-Pacific Partnership went into effect – albeit without the US.
