In 1986, Vietnam launched Đổi Mới - a homegrown, political and economic renewal campaign—that marked the beginning of its transition from a centrally planned economy to a socialist-oriented market economy. Between 1990 and 2010, Vietnam’s economy has grown at an annual average rate of 7.3 percent, and the per capita income almost quintupled. Vietnam’s transition from a centrally planned economy to a market economy and from an extremely poor country to a lower-middle-income country in less than 20 years—is now a case study in many development textbooks. But Vietnam’s other transition—to becoming an industrialized and modern economy—has barely begun. According to its recently approved Socio-Economic Development Strategy for
2011–2020, Vietnam aspires to achieve a per capita income level of US$3,000 (in current U.S. dollars) by 2020. This translates into a nearly 10 percent annual growth in per capita income over the next decade—requiring the country to replicate and sustain the economic success it achieved in the last 10 years. The Socio-Economic Development Strategy goes on to identify the country’s key priorities to meet this ambitious target: stabilize the economy, build world-class infrastructure, create a skilled labor force, and strengthen market-based institutions. Meeting these aspirations will not be easy. The country has experienced bouts of macroeconomic turbulence in recent years—double-digit inflation, depreciating currency, capital flight, and loss of international reserves—eroding investor confidence. Rapid growth has revealed new structural problems. The quality and sustainability of growth remain a source of concern, given the resource-intensive pattern of growth, high levels of pollution, lack of diversification and value addition in exports, and the declining contribution of productivity to growth. Vietnam’s competitiveness is under threat because power generation has not kept pace with demand, logistical costs and real estate prices have climbed, and skill shortages are becoming more widespread. | | |
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