How Vietnam Can Be An Economic Superpower By 2040

This is the chart of Vietnam’s exports since 2009. And as you can see it has quadrupled in the last 12 years. This has been largely due to Vietnam’s worker's productivity and friendly environment for doing business, which prompted businesses to open up manufacturing facilities in Vietnam. You can even say that Vietnam is the go-to destination for many businesses aside from China.

And this has contributed greatly to Vietnam’s economic growth, with its GDP per capita increased by 169% over the last 10 years, making Vietnam one of the fastest-growing economies on the planet. In this video, we’re going to look at how Vietnam has become the fastest-growing economies in the world, and we will look at its manufacturing prowess that can make Vietnam become the world’s leading exporter and economic superpower by 2040.

When you hear about Vietnam, one thing that comes to mind is one of the deadliest wars in the 20th century. The Vietnam War. And when you’re analyzing Vietnam's economics, you cannot avoid looking at the impact of the war. You see, after the war, the nation's infrastructure has been destroyed by countless battles and bombings. Not to mention that even before the war it is one of the poorest nations on earth. The rebuilding process is slow and painstakingly hard. With communistic system not exactly spurring economic growth. But this all changed when the Đổi Mới economic reforms were initiated in 1986.

The Đổi Mới policy is a series of reforms that sought to transition Vietnam from a command economy to a socialist-oriented market economy. Which results in vast privatization that attracts many foreign investors. As a result, Vietnam experienced huge economic growth in the 1990s, and over the last 20 years, Vietnam has recorded an average annual economic growth of 6.5 percent. Easily one of the highest among developing countries.

And one of the biggest contributors to Vietnam’s economic growth lies in its exports. In fact, Vietnam posted an export to GDP ratio of 106%, which can happen if the combined value of a nation’s imports and exports exceeds the nation’s GDP.

As a result, Vietnam has achieved a high employment rate in a very short duration of time as lots of foreign companies are establishing manufacturing facilities in Vietnam. Not to mention that there are tax reductions for foreign companies. Which makes it even more tempting to open up a factory in Vietnam.

One more major factor in attracting foreign companies is cheap labor. And Vietnam has a low manufacturing labor costs of 2,99 US dollars per hour in 2020, much lower if compared to other manufacturing hubs such as China and Mexico. As a result, Vietnam has an unemployment rate of 2,3% as of December 2020, which makes Vietnam one of the top 20 countries with the lowest unemployment rate.

All of this means that Vietnam is on pace to become an economic superpower by 2040, backed by its manufacturing prowess. Manufacturing is perfect for a country that has a large population with a pool of unskilled labor to produce low-cost goods such as Vietnam. But this is actually Vietnam’s biggest problem. You see, right now Vietnam is enjoying an influx of foreign manufacturers.

Ever since the trade war between the U.S and China, lots of high-tech companies are flocking into Vietnam. Apple has already begun producing their AirPods and some of their MacBook in Vietnam, and Samsung and Intel contribute almost 25% of Vietnam’s total exports. All of this sounds great on the surface, as Vietnam wants to attract high-end manufacturers.

But as of today, there are just not enough skilled workers available in Vietnam. Most of Vietnam’s labor force is in agriculture, despite the industry only contributing 14% of its GDP. The service sector looks great, but it has taken a big hit because a big part of Vietnam’s services is in tourism. And most of Vietnam’s labor force is employed in low-skilled manufacturing jobs such as textile production. Make no mistake, the capacity to provide high-end manufacturing is still there, but in order for Vietnam to become an economic superpower, the availability of high-skilled labor needs to match the demand for it. And if Vietnam can have at least a sizable force of high-skilled labor, then the future is bright for this country.

How Vietnam Can Be An Economic Superpower By 2040

Tags: Vietnam, Vietnam economy, Vietnam economics, Vietnam economy 2021, economy, economics, the economy of Vietnam, Vietnam exports, Vietnam manufacturing, economics explained, economics documentary.

#Vietnam #Economics #VietnamEconomy