Seminar hears of the good and bad in Vietnam's economic development over the last 30 years.
Despite 30 years of innovation, positive changes in its economy, and at one time bearing the tag of “Asia’s Next Dragon”, Vietnam’s position in global rankings has not improved to any great extent, according to a report presented by Associate Professor Tran Dinh Thien, Director of the Vietnam Institute of Economics, to the Vietnam Economic Forum: Summary of Economic Development over 30 years in Vietnam, held in Hanoi November 19.
He pointed out that after 30 years of innovation Vietnam has made positive changes in economic growth, including high growth for several consecutive years, lifting millions of people out of poverty, introducing many improvements in economic restructuring, and opening up to global integration. From a poor agricultural country with a low average per capita GDP of only $98, Vietnam went on to join the group of middle income countries. GDP per capita in 2013 stood at $1,910, an increase of seven-fold compared with 2000 and 9.5-fold compared with 1986, when the “doi moi” economic reforms were introduced.
Vietnam is now a signatory to many trade agreements of large scale and has attracted increasing amounts of foreign direct investment (FDI). The FDI sector has grown strongly and now accounts for nearly 70 per cent of Vietnam’s export turnover.
FDI and Disbursement, 1986-2014
“But Vietnam is still to escape from its low level of development,” Associate Professor Thien told the gathering.
“This level is expressed in outdated technology, market economic institutions being hampered by backward thinking, and especially the country’s dependence on the Chinese economy,” he said.
Vietnam’s economy continues to face challenges such as growth quality falling sharply, economic restructuring taking place slowly, and the development of the private sector remaining unsustainable. Low labor productivity persists and productivity growth is declining. These are barriers that have hampered Vietnam’s economic development. In 2014 Vietnam was still in the early stages of economic development, while Thailand and China were in the third stage of development and Malaysia had moved to the fourth stage. It’s no surprise therefore that Vietnam’s global ranking has seen little improvement. The improvements that have been seen are those commonly found within the group of economies in the early stages of development. Since 2010 Vietnam’s ranking has slipped from 59th to 68th.
Global Competitiveness Index (2006-2014)
With the achievements recorded over the last 30 years, however, Vietnam has laid the platform to become a prosperous nation, Associate Professor Thien said. “Success will depend on choice of development path,” he concluded.
“Vietnam’s 30 years of economic reforms has seen ups and downs along with breakthroughs in opening up markets and integration. Significant achievements have been recorded, including high economic growth for several consecutive years, lifting millions of people out of poverty. Despite the admirable achievements over the last three decades, Vietnam is still behind developed countries and the gap has become wider. Vietnam also lags behind in global rankings regarding most development criteria. Only Vietnam can improve its position.”
Associate Professor Tran Dinh Thien, Director of the Vietnam Institute of Economics
“In the last 30 years Vietnam’s socioeconomic situation has developed rapidly in many fields and been recognized around the world, in particular the country’s rapid economic growth. Innovation has helped to bring a new vitality to development. However, if Vietnam does not make drastic changes it will be left behind and lag even further behind in five to ten year’s time.”
Professor Nguyen Quang Thai, a member of Vietnam Economic Association