Vietnam - Future trends

There is considerable debate about the economic future of Vietnam. Pessimists focus on the country's inadequate physical infrastructure and its powerful state bureaucracy which makes doing business in Vietnam complex and difficult. They also point to persisting ambiguities in Vietnam's evolving legal structure and issues of corruption. These obstacles are normally more of an obstacle for those from the West than those from other Asian countries such as China, Taiwan, and Thailand.

In contrast, there are many reasons to be optimistic about Vietnam and its economic future. First, Vietnam has the good fortune of having access to Pacific ports and being strategically and centrally located near China, India, and Indonesia, all among the world's largest countries. These are potentially huge markets for possible Vietnamese exports.

Second, with its Confucian traditions, Vietnam has demonstrated a strong commitment to education and human resource development. The country's overall literacy rate is an impressively high 93.7 percent. Already, Vietnamese students are performing well in the Scientific Olympics in areas such as math and science. On several key educational indicators, Vietnam has equaled or surpassed Thailand, despite having a much weaker educational infrastructure. Vietnam may have the highest quality labor relative to cost of any country in the world.

Third, Vietnam shares a number of common characteristics with Japan and now seems in a number of ways similar to Japan during its post-war phase of development, though, of course, Vietnam does not have the industrial pre-war base that Japan had. Both countries had their infrastructures destroyed in war, and both were highly motivated to rebuild their societies and economies after suffering from war. The demographics of Japan and Vietnam are similar, with high population density and a relatively small portion of arable land, necessitating the ability to use limited space productively and creatively. Eventually Vietnam's population will be larger than that of Japan. Thus, like Japan it has important economies of scale and related people resources.

Fourth, Vietnam has excellent tourism potential which can be a valuable source of foreign exchange. It also benefits from substantial and increasing international remittances of overseas Vietnamese. Fifth, in fighting the Chinese, the French, and then the United States, the Vietnamese demonstrated impressive courage, determination, flexibility, and creativity. These traits bode well for the entrepreneurial potential of Vietnam.

Finally, the October 2001 approval by the U.S. Congress of a trade agreement between the 2 countries will provide Vietnam with greatly improved export access to the large U.S. market for a wide variety of products. Here there is also a parallel with the earlier economic history of Japan.