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How Vietnam Improved Its Economy

How Vietnam improved its economy
Vietnam has seen a tremendous amount of growth in various sectors over the past three decades. This growth is largely due in part to economic reforms that have undergone implementation in the country. Before the reforms, Vietnam remained one of the poorest countries in the world. However, it has since grown to become a country with a lower-middle income. The GDP of Vietnam grew tremendously between 2002 and 2018 by increasing 2.7 times. Even in the face of the worldwide COVID-19 pandemic, the economy of Vietnam has been able to remain steadfast and resilient through trying times. Here is some information about how Vietnam improved its economy.

The Doi Moi Reforms

The Doi Moi reforms that the government implemented in 1986 helped Vietnam improved its economy. Under these reforms, Vietnam as a country took three significant steps as a country that would help improve the economy. The first of these steps was embracing free trade.

For many years, Vietnam has entered into various free trade agreements with numerous nations. One includes ASEAN, which Vietnam became a part of back in 1995. Vietnam and the U.S. partnered together by signing a free trade agreement in 2000, and seven years later, Vietnam joined the World Trade Organization. By joining these institutions and forming these alliances, Vietnam has been able to reduce the number of tariffs on imports coming into the country and exports leaving the country.

Making Changes

The second step that the Doi Moi reforms took to better the economy was implementing deregulation and making it cheaper for companies to conduct business within Vietnam. One way this occurred was through the enactment of the Law on Foreign Investment which passed in 1986. This law allowed companies from foreign countries to come into Vietnam to conduct business. Over the years, this law underwent revisions numerous times to better accommodate investors.

This law has improved Vietnam’s competitiveness tremendously over the years. In 2006, Vietnam’s global competitiveness ranked at 77. Only 11 years later in 2017, Vietnam ranked at 55 in world competitiveness. Lastly, the Doi Moi reforms aimed at improving human capital in Vietnam and improving the country’s infrastructure.

To improve the human capital of Vietnam, the government decided to prioritize education within the country. Better education is a must for Vietnam due to its ever-growing population. A larger population means more jobs and citizens must receive quality education to perform them. Infrastructure has been vitally important for the growth of Vietnam’s economy as well. Making sure that all citizens have access to internet services is important for a country due to the technological needs of the modern age.

How It Helps

Vietnam improved its economy due largely to the Doi Moi reforms. Today, the economy of Vietnam continues to flourish. In 2020, during the midst of the COVID-19 pandemic, Vietnam’s economy expanded by 2.9%. Compared to other countries at the time, this growth rate was among the highest in the world.

Since 2010, the poverty rate in Vietnam has slowly declined each year. In 2012, the poverty rate was at 40.8%. By 2018, the poverty rate fell almost by 20%, leaving it at 23.1%. As it currently stands, the Vietnamese economy continues to stay strong and grow.

– Jacob E. Lee
Photo: Flickr

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Vietnam Has Reduced Poverty but Progress Is Still to Be Made

Vietnam has reduced povertyNearly 30 years ago, Vietnam was among the poorest countries in the world. Today, Vietnam has reduced poverty and is estimated to be a developed nation by 2020 due to its fast-growing economic success. However, 9 million are still living below the poverty line in the one-party Communist state and progress can be made.

After the Vietnam War, which concluded when North and South Vietnam were reunited as one country in 1975, Vietnam faced war damages and an impoverished economy. From 1975 to 1985, Vietnam was a poor and self-reliant country facing a serious economic crisis. The country endured food shortages, damaged infrastructure and worsening living standards. About 70 percent of its population was living below the poverty line.

Doi Moi

In 1986 came the introduction of a political and economic renewal campaign called Doi Moi. It transformed the country into a globally-oriented market economy and resulted in major improvements in economic conditions and in human development. In 1993, the success of Doi Moi was represented as Vietnam’s poverty rate was reduced to 58 percent.

From 1995 to 2014, Vietnam restored diplomatic relations with the U.S., became a lower-middle income country and grew its per capita gross domestic product from $288 to $1,910. Over the past three decades, Vietnam has reduced poverty by economic development, causing the national poverty rate to drop from 70 percent to 11.3 percent.

The results of Vietnam’s poverty reduction have been extraordinary, and there have been several social and economic factors helping to reduce poverty and improve living standards for millions of people.

Levels of Education

Vietnam’s level of education has increased immensely. Figures estimate that enrollment rates in primary education have reached near universal levels, meaning more Vietnamese children are receiving an education now than ever before.

In 1990, Vietnam’s primary and secondary school enrollment rates were alarmingly low. People who have not completed primary education are more vulnerable to living in poverty. Today, the enrollments for primary and secondary school for the poor have reached more than 90 and 70 percent respectively. Additionally, the country’s literacy rate has reached more than 90 percent for men and women.

Investments in Agriculture and Infrastructure

Vietnam has reduced poverty through improved income by growing more profitable industrial crops in highland or mountainous regions. Targeting investment in agriculture and advancing restructuring in Vietnam has caused substantial increases in agricultural yields and poverty reduction in rural areas.

Enhanced infrastructure has also been a driver of Vietnam’s poverty reduction. Wide-reaching infrastructure investments throughout Vietnam have supported efficient economic reform policies, surged productivity and provided better economic opportunities for the poor.

Vietnam has Reduced Poverty

Over the past 30 years, Vietnam has reduced poverty and at least 14 million Vietnamese people have joined the middle class. Of the country’s 90 million people, however, 9 million still live in extreme poverty and most belong to ethnic minority groups.

From 1993 to 2006, extreme poverty rates decreased by 85 percent for the ethnic majority group. The ethnic minority group, however, only saw a decrease of 48 percent. These ethnic minorities, primarily the Tay, Thai and Hmong peoples of northwest Vietnam account for 73 percent of the poverty rate in the region. Ethnic minorities in Vietnam are more vulnerable to social and economic disadvantages due to a lack of education, clean water, sanitation, transportation, health care and other services.

Although the poverty rate among ethnic minorities decreased by 13 percent from 2014 to 2015, further efforts should be taken to alleviate poverty for the 9 million still in need. Vietnam’s focus should be on improved education and infrastructure in hard-to-reach areas comprised of mainly ethnic minorities who are more vulnerable to natural disasters, climate change and economic shocks. Although Vietnam has reduced poverty, progress is still to be made.

– Natalie Shaw
Photo: Flickr