Viet Nam, after two decades of rapid economic growth, is today considered a development success story. Political and economic reforms (Doi Moi) launched in 1986 have transformed Viet Nam from one of the poorest nations in the world to a middle-income country within a quarter of a century. This dramatic growth, with per capita income rising from below US$100 to an estimated at US$1,596 in 2012, has coincided with a dramatic reduction in poverty from 58 to 14 per cent between 1993 and 2008 and an estimated 11.8 per cent in 2011. While most development indicators have improved with a number of Millennium Development Goals attained ahead of the 2015 deadline, new challenges are emerging as Viet Nam enters a new phase of development.
With 88.5 million people from 54 different ethnic groups, Viet Nam is a diverse nation with a rich culture that has witnessed a century of dramatic change.
Having emerged from periods of colonialism and decades of conflict, the reunification of Viet Nam in 1975 following a costly war with the United States and the Doi Moi economic revolution in the 1980s have transformed one of the world’s poorest nations into one of Southeast Asia’s most dynamic and fastest growing economies, with aspirations to be a developed nation by 2020.
The rise of this aspiring Asian tiger economy resulted from a shift from a centrally-planned to a ‘socialist market’ economy in 1986, with the resulting inflows of foreign direct investment, emergence of the private sector and a more globalized approach to business and trade as a result of Viet Nam’s World Trade Organization accession in 2007 driving its economic growth engine.
This language for change translated into a breathtaking period of social change amid rising living standards and a reduction in poverty.
These trends, along with new ones such as serious bouts of macroeconomic instability since 2008, have also presented the one-party communist state with significant policy challenges as it looks to consolidate and build for a new period of sustainable socio-economic development.
Amid such rapid economic growth and dramatic changes in society, the resulting growing pains leave Viet Nam facing significant challenges today.
If left unchecked, these mounting challenges and growing disparities will severely compromise the country’s sustainable development. While there has been an eye-catching drop in the rate of poverty, it is not reflected in ethnic minority and rural populations with more people vulnerable to falling back below the threshold.
Further poverty reduction efforts will be hampered by continuing domestic macroeconomic instability and the need to employ a new economic growth model, along with the ongoing global economic crisis and associated reduction in donor funding.
The recent stall in Human Development Index progress, Viet Nam climbed from 120th in 1995 to 108th in 2005 only to fall to 127th in 2012, comes as a broad spectrum of other issues such as climate change, environmental degradation, depletion of natural resources, corruption, growing disparities within society and rapid urbanization demand urgent policy responses.
While Viet Nam has achieved most MDGs ahead of the 2015 deadline, more progress is needed to achieve MDG 6 on HIV/AIDS and MDG 7 on environmental sustainability.
Unlocking the door to a more equitable and prosperous society will depend on
success in regulating economic growth in environmentally sustainable ways, improving governance and distributing wealth and social services more evenly across society.
The Socio-Economic Development Strategy 2011-2020 calls for ‘breakthroughs’ in structural reforms, environmental sustainability, social equity and macroeconomic stability to allow Viet Nam to lay the foundations for a modern, industrialized society by 2020.
Viet Nam has won global recognition for its development and poverty reduction successes on the back of rapid economic growth during the past two decades.
It has transformed from one of the world’s poorest nations to boasting one of the fastest growing economies, with lower middle-income status attained in 2010.
This growth, based on robust economic reforms and World Trade Organization-driven global integration, helped drive down poverty from 58 to 14 per cent between 1993 and 2008 and an estimated 11.8 per cent in 2011.
Rising living standards have been matched by a steady improvement in a number of development indicators, with improved access to education and health, along with targeted social safety nets for a broader range of society.
Viet Nam has been applauded for taking steps toward creating a more equitable society that is inclusive of the most vulnerable members of society, including the poor, ethnic minorities, women and the disabled.
UNDP has helped Viet Nam enjoy success in a number of breakthrough areas during the past three decades, most recently with the achievement of a majority of MDGs ahead of the 2015 deadline, especially MDG 1 on poverty reduction.
With an eye to the future, Viet Nam is now recalibrating its economic model to drive a new period of growth and sustainable development.