Vietnam - Economic Growth and Development
- AS, A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 29 Dec 2018
This webinar for looks at growth and development policies in Vietnam and compares and contrasts their current growth with China. Vietnam is forecast to have grown by 7% in 2018 and is one of the fastest-growing countries in the world.
The video analyses and evaluates some of the key growth drivers and evaluates barriers to growth including environmental challenges and vulnerability to external economic shocks.
Vietnam is a fast-growing lower middle income country that has received considerable inward investment in recent years.
More reading here:
Vietnam is the most globalized populous country in modern history (World Economic Forum)
Vietnam - World Bank report on recent economic developments in Vietnam (2018)
The slides from the revision webinar in the Vietnamese economy can be found here
Core study notes
Vietnam was the only lower-middle-income member in TPP
Vietnam is a country of 90 million people, the 14th most populous on the planet.
Vietnam’s location on the easternmost edge of the Indochinese peninsula makes it a vital link between East, Southeast, and South Asia.
Vietnam has been ranked among the five countries likely to be most affected by climate change / changing weather patterns and natural disasters – over 1% of GDP is lost every year to extreme weather events such as floods and droughts
Vietnam’s Growth/Development Model
- Đoi Moi reforms (renovation) launched in 1986 – aimed to create a socialist-oriented market economy
- Vietnam has made a transition from low to middle-income country – the $1.90-a-day extreme poverty rate fell from 50 percent in the early 1990s to 3 percent today
- Per capita income in Vietnam has gone from around $100 in the 1980s to about $2,100 in 2015, PPP is >$5,000
- Vietnam remains a one-party socialist state run by the Communist Party but embracing free-market policies
- Strongly export-oriented – free trade deals with South Korea, TPP signatory, EU FTA due in 2018, TTP signatory
- Growth model built on heavy inward investment and rapid transition away from farming and low value textiles
Is Vietnam following the Chinese model?
- China’s ”authoritarian capitalist model of development” – a hybrid form of capitalism
- Builds on earlier, state-centered Asian models of development such as in South Korea and Taiwan
- Emphasis on gradual reforms rather than shock therapy
- 5 year plans to set priorities / send signals – establish a blueprint for development and changes in growth drivers
- Control of the exchange rate / capital controls / interest rates (People’s Bank of China)
- Government ownership/control of strategic industries
- Heavy investment in primary education
- Focus on cutting extreme poverty / rural/urban divide
- Favourable environment for inward foreign investment
- Special Economic Zones / export driven growth
- Strategy to “go global” especially outward investment
- Stimulate development of a middle class of consumers
Is Vietnam different from China?
- A socialist-oriented “market economy”
- Country has maintained more of their pre—communist traditions / cultures
- Higher ratio of domestic consumption / GDP
- More willing to operate a floating currency
- Significantly higher export/GDP ratio
- Strong connections with the United States (biggest export partner + military ties)
- Suggestions of deeper entrepreneurial culture
- Slower than China to privatize state-owned businesses