By Suresh Hanubal
50 years ago, Vietnam was the site of a deadly civil war between communists and capitalists. Today, its economy is booming, it has successfully contained the coronavirus, and many economists look to it as the next Asian Tiger. How did Vietnam go from a poverty-stricken war-torn country just 50 years ago, to where it is today? How did Vietnam become one of the few countries worldwide to contain the coronavirus, a center of international trade, and a Southeast Asian economic and cultural powerhouse? Let’s investigate.
Vietnam, much like its powerful northern neighbor China, is ruled by the Communist Party. Again, much like China, this Communist Party government has followed an economic model of autocratic state-owned capitalism as opposed to traditional communist economic policy. And again, much like China, its economy has been booming recently. Twenty years ago, Vietnam has a GDP Per Capita (PPP) value of roughly $2,000, whereas today it boasts a corresponding value of more than $8,000, a more than 300% increase! Similarly, its GDP has increased by almost 900% from roughly $30 Billion USD in 2000 to $250 Billion USD today. How did this boom occur? It is due quite simply to good governance, heavy government investment in industry and infrastructure, and healthy encouragement of foreign direct investment (FDI).
Vietnam’s aforementioned communist government means that projects that would in a democracy take years to finish can be completed in a matter of months. Further, low wages and a business-friendly tax regime make the country incredibly attractive, especially to corporations fleeing increasing wages and increasingly burdensome regulations in neighboring China. China, much like South Korea, Taiwan, Malaysia, and Japan before it, is exporting its way to developed country status.
Vietnam’s success in controlling the coronavirus is due to a number of factors. Firstly, like other East Asian countries, it has a collectivist culture. So unlike the United States and other Western countries, when government mandates came down telling people to socially distance, quarantine, etc… people listened for the most part. In addition, government messaging has been consistent, and oftentimes creative. Vietnam, similarly to New Zealand, also shut down extremely early, and has been very good at catching subsequent outbreaks before they threaten to spiral out of control.
So what is the secret to the “Miracle in Vietnam”? As seen, it can be attributed to simply a mixture of sound economic policies, (relatively) low levels of government corruption, high levels of societal trust, and as always, some manner of luck! With any luck, a couple of decades from now Vietnam will be a part of the rich countries club with its East and Southeast Asian peers, as long as it continues to build upon its steady course so far.