Vietnam’s rise: from economic reforms to global diplomacy

Vietnam has emerged as Asia’s latest economic miracle, rooted in profound economic reforms initiated in 1986. Once one of the world’s poorest nations, Vietnam is now a lower-middle-income economy, reflecting a growing national self-confidence often showcased in the Vietnamese people’s reference to their triumph in the “American war.” With a GDP per capita of $15,200 in PPP terms, it surpasses the Philippines and almost matches Indonesia. This growth has lifted 40 million people out of poverty, though significant socio-economic disparities persist, especially outside major cities where many still live precarious lives.

Several key factors contribute to Vietnam’s economic success, including high educational standards comparable to those in the U.S. and Singapore, fairly robust transport and energy infrastructures, and rapid digitisation. Participation in multiple free trade agreements has also attracted significant foreign direct investment, notably from South Korea’s Samsung and companies like Apple moving operations from China. However, Vietnam faces challenges in integrating domestic firms into global supply chains and must invest in technology, innovation, and workforce skills while addressing issues like corruption and weak rule of law.

Geopolitically, Vietnam balances relations among global powers with “bamboo diplomacy.” U.S. President Joe Biden’s visit to Hanoi elevated U.S.-Vietnam ties to a “Comprehensive Strategic Partnership,” amid rising regional tensions, particularly with China, its largest trading partner. Despite historical conflicts, Vietnam must maintain this relationship, especially given China’s actions in the South China Sea. Additionally, Vietnam leverages its relationship with Russia for military technologies, balancing the dominant influence of China. Vietnam’s strategic positioning and adeptness at navigating international relations underscore its growing importance in regional and global contexts.

Source: News Decoder