Vietnam has shown that success is possible where will is present. The once backward country has become a classroom study for doctorate degree students of economics who wish to understand how a backward economy could be transformed into one of the strongest manufacturing hubs in the world.
In an article entitled ‘Evolution of Vietnamese Industry’, researchers Nguyen Thi Tue Anh, Luu Minh Duc and Trinh Duc Chieu pointed out that the industrial sector in Vietnam contributes approximately 34 percent of Gross Domestic Product (GDP), with manufacturing being by far the most important industrial sub-sector, accounting for 87 per cent of total industrial gross output.
According to them, within manufacturing, the food and beverage industry stands out as the most important industry with around 19 per cent of total industrial output.
“One of the most important policy decisions for Vietnam during the Doi Moi process was the shift from a strategy of import substitution (IS) to one of export orientation,” they said.
“Obviously, Vietnamese policy makers wanted to avoid the failure of the Latin American economies and to learn from the successes of the industrialised nations and newly industrialised economies (NIEs) of East Asia, the renowned ‘flying geese’. As a result, during the past decade, Vietnam’s industrial output has grown at an average annual rate of 15.2 per cent and total annual exports have increased 18.1 per cent (GSO various years),” they added.
Explaining further, they said that key to the success was a creation of the right atmosphere for foreign direct investment (FDIs).
”Dynamic foreign direct investment (FDI) and the private sector played key roles in manufacturing and exporting activities, in contrast to the earlier monopolistic behaviour and inefficiency of the centrally planned state-owned enterprises (SOEs),” they disclosed.
Today, the remaining SOEs have become more active and competitive exporters, certainly a reflection of Vietnam’s continued learning process at both country and cross-sector levels, they stated.
With these steps, the results have become visible.
Today, it is possible that the clothes and footwear you are putting on right now are from Vietnam. In 2017, the Southeast Asian country earned $31 billion from exports of textile and garment industry alone, a year-on-year increase of over 10 percent, according to an online information platform Vietnam Briefing.
In 2018, the country made $16.24 billion from footwear, representing a 10.5 percent increase over 2017, according to Lefaso, the Vietnam Leather, Footwear and Handbag Association.
The country has gone from obscurity to fame in manufacturing, thanks to certain reforms done by the ruling class.
It took certain steps to get to where it is today. The country embarked on market reforms. Vo Tri Thanh, a Vietnamese economist, said keys to the country’s growth were an acknowledgement of the private business right; the market-oriented reforms; macroeconomic and social stability, as well as the opening and the integrating of the economy into the regional and world economy, especially in the areas of trade and Foreign Direct Investment (FDI).
ODINAKA ANUDU
