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Vietnam: The Newest Asian Tiger

Tay Son Street seen from an overpass bridge at Thai Ha – Tay Son – Chua Boc Intersection, Hanoi, Vietnam. Quenhitran/Wikimedia Commons CC BBY-SA 4.0

China’s emergence as a key global economy has largely dominated regional and global economic discussions. However, China’s neighbours are not only integral links in its manufacturing supply chain models _ and therefore important backstage’ members of the Chinese manufacturing show _ they have also become important players in regional and global economic flows.

Vietnam has emerged as a key Asian economy on the back of an extended period of strong GDP per capita growth, averaging 6% since 1990 _ second only to China. This growth coincided with effective government policies that sought to attract investment and drive education. With its young, highly skilled workforce, Vietnam has seen a constant inflow of foreign direct investment from key global companies such as Nike, Panasonic, Microsoft, and Adidas.

Although rising labour costs in China are widely considered a key factor in drawing investment into Vietnam, where labour is much cheaper, the country has also benefitted from effective government policies seeking to liberalise the economy and educate the workforce. Public spending on education totals about 6.3% of GDP, notably higher than average low- and middle-income countries, such as Indonesia, Philippines, Pakistan, Egypt, and South Korea.