Thu Hà

Innovation of the economic model has transformed Việt Nam from one of the world’s poorest countries to one of the world’s fastest-growing economies and a global success model that few countries have managed to achieve over the past 80 years, economists say.

Việt Nam’s economy has had to travel through a long journey of hardship before gaining spectacular achievements.

During the 1945-1975 period, North Việt Nam's economy was deeply affected by prolonged wars, and had to rely on foreign aid to maintain livelihoods, with its GDP almost negligible.

After the nation’s reunification in 1975, under the international embargo and the centralised planning economic model, Việt Nam’s economy continued to experience a dark decade with an economic crisis that saw a hyperinflation of 453.5 per cent in 1986. During the period, the country’s production stagnated, consumer goods were scarce and people's lives faced countless difficulties.

In the memories of Dr Nguyễn Trí Hiếu, an economist, one of the few diasporic Vietnamese returning to Việt Nam at that difficult time, Hà Nội in 1990 only had Thắng Lợi Hotel and no supermarket. There were very few cars and motorbikes in the city, and most Hanoians rode bicycles.

“It can be said that the living standards of Vietnamese people at that time were among the lowest in the world,” Hiếu recalled.

Historic decisions 

The historical turning point for Việt Nam’s economy came at the 6th National Congress of the Vietnam Communist Party in 1986 where the Party initiated the Đổi mới (Renewal) policy to transform the country’s centrally planned economy into a socialist-oriented market economy.

“This was a vital turning point, not only rescuing the economy but also opening a new period of development in peace, dynamism and integration for Việt Nam,” said Nguyễn Bích Lâm, former director of the Vietnam General Statistics Office.

With the policy of Đổi mới all-round, Việt Nam carried out institutional economic reforms that recognised a multi-sector economy with the existence and development of the private economy and foreign investors. The Government promulgated a number of fundamental laws which created leverage for economic development.

Besides that, the country also reformed agricultural and rural development policies. Under the new policies, the State assigned land use rights and products obtained on land to farmers, and eliminated rigid centralised management mechanisms, which motivated farmers to increase production.

Another reform in fiscal and monetary policy under Đổi mới, which eliminated the subsidy mechanism, established a commodity-currency relationship according to the market mechanism and built a two-tier budget and banking system in accordance with international standards, helped Việt Nam stabilise its macro-economy and control inflation.

With Đổi mới, the country also implemented an open-door policy, considering international integration and FDI attraction as important drivers to promote economic growth and transform the development model.

“Under the international integration policy, in 1993, Việt Nam became a member of the World Bank, the International Monetary Fund, and the Asian Development Bank before joining APEC in 1998. In 2000, Việt Nam signed the Việt Nam-US Bilateral Trade Agreement, creating an important stepping stone for the country to join the World Trade Organisation in 2007,” Lâm said.

The 40-year Đổi mới process has helped Việt Nam transform a largely agricultural economy with limited resources and low incomes into one of the world’s fastest-growing economies. By the end of 2024, Việt Nam's GDP reached US$476 billion, nearly 106 times higher than in 1986, ranking 4th in ASEAN and 34th in the world.

According to Brand Finance, the value of Việt Nam's National Brand in 2024 was valued at $507 billion, ranked 32nd in the world.

The country’s per-capita income rose to $4,700 in 2024 from under $80 in 1986, and is expected to exceed $5,000 by the end of this year, lifting the country above the lower-middle-income threshold and toward the upper-middle-income group.

From a country that was besieged and embargoed for over 20 years, Việt Nam has developed trade relations with more than 230 economies in the world and become a trade partner in the group of 20 world-leading economies. The country’s total import-export turnover in 2024 reached nearly $800 billion, of which about $23 billion was trade surplus.

 

After nearly 40 years of implementing the open-door and international integration policy, Việt Nam has attracted more than $520 billion of registered FDI capital.

According to the United Nations Conference on Trade and Development, Việt Nam ranks 3rd in the ASEAN region and among the 15 developing countries attracting the largest FDI capital in the world.

According to Hiếu, important steps have been made for the Vietnamese economy in the past 40 years after Đổi mới. Việt Nam has come a long way and has made remarkable progress.

“Now we see a completely different Hà Nội: a large city in the Asia-Pacific region with shiny new highways and high-rise skylines. Vietnamese people's lives have improved markedly. It can be said that the country has entered a period of strong economic development,” Hiếu said.

Việt Nam’s bold and effective development path for the past 40 years of renewal has also earned praise from international economic organisations.

Álvaro Pereira, chief economist of the Organisation for Economic Cooperation and Development (OECD) in Việt Nam, said that few countries impressed him as much as Việt Nam. He attributed rapid income growth, with per-capita income roughly doubling every decade, to excellent macroeconomic management, sound government policies and strong popular drive.

New growth era

The historically remarkable achievements over the past eight decades have helped Việt Nam accumulate position and strength for breakthrough development in the new era.

This year is also considered one to create a foundation for Việt Nam to take off in the new era, getting prosperous by 2045 and becoming Asia’s next ‘tiger economy’.

Under Việt Nam’s 100-year strategy to 2045 approved by the Party, the country aims to become a developed and high-income country with a modern industry. The country has recently raised its GDP growth target this year from 8 per cent to 8.3-8.5 per cent, which aims to create momentum for growth in 2026, targeting 10 per cent or higher.

Party General Secretary Tô Lâm said: "If we do not achieve double-digit economic growth for many consecutive years, it will be difficult for us to achieve the goal under the 100-year strategy. Currently, our per capita income is only nearly $5,000, while the goal is to reach more than $20,000 within the next 20 years. Time does not allow us to postpone further, and we must focus very highly."

Experts say that Việt Nam’s goal is a challenge amid global trade tensions, but it is still feasible as the country has so far launched what could be its most ambitious economic overhaul in decades: implementing a comprehensive administrative restructuring and a growth model based on science, technology, innovation and creation that is considered the country’s second Đổi mới.

Marcus Yiu, Moody's lead credit analyst for Asia, said: “Việt Nam’s reform momentum has increased, and that's something that they will recognise to be positive. We've seen strong macro-economic data in recent years.

“We view the Vietnamese government and provincial restructuring to be well-intended, if executed effectively. This will not only help reduce fiscal costs and also free up resources for capital expenditures, but hopefully enhance the efficiency of public investments, which has been quite lagging over the past few years.”

In recent reports, the World Bank believed that maintaining momentum for institutional reforms and promoting greener development could help Việt Nam achieve high-income status by 2045.

Mariam Sherman, World Bank director for Việt Nam, Cambodia and Laos, said: “Việt Nam’s ambition to become a high-income country by 2045 has brought renewed focus on institutions as enablers of sustained growth. Recent efforts show commitment, but achieving this goal will require even bolder reforms to unlock the private sector’s potential to drive growth and create quality jobs for its people.”

The OECD, in its Việt Nam 2025 report, also recognised the country’s significant long-term progress. Chief economist Alvaro Pereira expressed confidence that Việt Nam could achieve high-income status by 2045 or even sooner with sustained reform efforts and integration.

“Achieving Việt Nam’s objective of becoming a high-income country by 2045 will require policies to boost productivity growth," Pereira said.

"A key priority is to maintain the country’s attractiveness to foreign investment and reap more of its benefits, including by strengthening links between highly productive multinational enterprises and local firms.”

The path ahead for Việt Nam to become a high-income country by 2045 will include challenges, but with a clear vision for sustainable development and comprehensive integration, Việt Nam has solid grounds for confidence in meeting its ambitious goal.  BIZHUB/VNS