According to a report released on September 12th 2018, by McKinsey Global Institute, Vietnam is listed as one of the world’s 11 economies in a report titled “outperformers high-growth economies and companies that propel them.”
The report identified two key factors that help explain their outperformance: a pro-growth policy agenda of productivity, income, and demand that has driven exceptional economic growth, and the underappreciated but nonetheless standout role that large companies have played in driving that growth. The report identified a group of 11 geographically diverse outperformers. They achieved real average annual per capita GDP growth over the 20 years between 1995 and 2016 of at least 5 percent. The 11 include Vietnam, Cambodia and Laos. These 11 countries demonstrated consistency by exceeding the benchmark growth rate in at least three-fourths of the 20 years.
Collectively, these 11 and a further 7 (which have had more consistent gro wth over 50 years) outperformers have been the engine for lifting one billion people out of extreme poverty, defined by the World Bank as living on less than $1.90 per day. Rising prosperity in these countries has not just reduced poverty but has also enabled the emergence of a new wave of middle and affluent classes. Between 1996 and 2016 Vietnam in fact reduced poverty levels from approx.70 % to less than 10%.
The report highlighted that Vietnam’s performance has been assisted by the fact that it has moved rapidly from a socialist market economy to a deregulated capitalist economy that has seen a major influx growth in private and foreign enterprises. Relationships with and investment by global players has also been noted as a major driver in growth and productivity. In Vietnam major companies in the electronics sector have been major players including Foxcomm, Intel, Samsung etc. Vietnam was noted as the fastest growing electronics exporter in the region.
Another major contributor has been the FTA’s entered into by Vietnam with ASEAN and other bi-lateral agreements with Asian countries such as Korea.
Vietnam’s current policies for SME development and focus on innovative and start up hubs also augers well for keeping Vietnam in this group of high performing economies.
Kenneth M Atkinson