At the end of the Vietnam War, Vietnam had one of the poorest economies in the world. But this began to change after 1986 when economic reforms triggered the reconstruction of the country. Now it has become a strong manufacturing player engaged in global trade and displaying impressive domestic and globalization improvements.

What Has Happened?

Similar to China, Vietnam’s growth came from economic reforms which opened its economy to foreign investors and opportunities for global trade. Globalization and trade in Vietnam saw exponential growth and made their economy the fastest-growing economy in Asia last year at a rate of 8%.  

There are three key factors contributing to this rise. First is its embrace of trade liberalization. Second, they have supported this with domestic reforms. Finally, an increase in public investments in human and physical capital. The impact has been incredible. Vietnam’s trade in 2017 accounted for 190% of its GDP compared to 70% in 2007, progress which has had knock-on benefits for all of its economy. Between 2014 and 2016, for example, 1.5 million new manufacturing jobs were created. It has also been estimated that these open borders have allowed for more than 10,000 companies to move and operate within Vietnam. 

In particular, electronics manufacturing has expanded, creating high-value goods and better-paid jobs. Companies like Samsung, Google and Microsoft have moved their production into Vietnam and therefore created economic development in the country. 

What Does This Mean for Poverty in Vietnam?

Not surprisingly, globalization and trade in Vietnam have had many positive impacts on the Vietnamese people and poverty. In fact, between 2010 and 2020 poverty in Vietnam decreased from 16.8% to 5%. 

A 2014 survey saw that 95% of Vietnamese say “trade is good.” As part of the steps to open and maintain their economy, Vietnam invested in human capital, and this was focused on primary education. 

In 2015, the OECD Program for International Student Assessment ranked Vietnam at 8 out of 72 countries, an important figure when thinking about how education is so important in helping people raise their income and move out of poverty.

In the workplace, Vietnam continues to prove itself to be a progressive model where women’s employment has stayed within 10% of men’s and, according to the World Economic Forum’s Inclusive Development Index, it has done a good job at creating inclusive and sustainable growth. 

Looking Ahead

Globalization and trade in Vietnam and how it has been conducted is a model for healthy growth and has shown how a country can develop without leaving people behind. Due to a young working demographic and a growing middle class, Vietnam is likely to see this growth continue and the Vietnamese people will reap these benefits. 

– Daisy How
Photo: Flickr