How Vietnam’s Economy Went from Poverty to Prosperity
Globalization has its limitations, but there is no doubt it has propelled Vietnam to where it is today. Hanoi, Ho Chi Minh (or Saigon, as we call it), and Danang are cities thick with development. I live in Saigon, which is blooming into a world-class city. Its streets are lined with shops selling expensive luxury goods and its roads are bustling with motorcycles and posh automobile brands.
Vietnam has reached that crucial stage of development when a country makes its once-in-a-lifetime transition from poverty to prosperity. The journey to prosperity has been long and arduous, but the people of Vietnam feel more confident now than they ever have before. In fact, Nielsen noted that Vietnamese consumers are the fifth-most confident in the whole world. Pew Research Center also found that the Vietnamese led the world in believing their country was better off than fifty years before. Some 88 percent responded “Yes,” to this question when prompted, compared to 69 percent in second place India.
Hitting Rock Bottom
Vietnam has been defined by its battle for independence and a distinct cultural identity. It is this determination to be self-governing that explains why Vietnam is only now making that seismic shift in economic development—some decades later than East Asian peers. Vietnam’s determination to shake off the French after World War II is well known, and what happened next represents one of the great tragedies of the 20th century.
The Vietnam War left Vietnam in physical and economic ruins. Most of the country’s rail infrastructure, bridges, roads, and canals were destroyed. Hundreds of civilians died from unexploded landmines and bombs – many of the bombs lay hidden underwater in rice paddies. Millions of acres of forest had been defoliated by the toxic Agent Orange. More than half of the country’s villages had been destroyed. The war created more than ten million internal refugees, one million war widows, more than 750,000 orphans, 350,000 disabled war veterans, and left three million people unemployed.
To say the economy was badly shaken would be a massive understatement. Liberation Day itself had been a time of joyous celebration for many, but political reunification was accompanied by economic chaos and internment. No economy could have prospered under these conditions. In fact, Vietnam barely survived.
Rebuilding, Better Than Before
But it did survive. With a comeback of more capitalist-based economics, the Vietnamese government introduced a policy called, Đổi Mới which was billed as “a market economy with socialist orientation.” It marked a pivotal point for our country. A series of initiatives which not only officially sanctioned private businesses again, but also gave them the beginnings of a legal framework, allowed business to flourish again.
In addition, political tensions began to thaw; the US finally ended the trade embargo that had stifled the Vietnamese economy for decades. With these changes, the World Bank, the International Monetary Fund, and private investors began to view Vietnam as worthy of investment. The economy started growing by an average of 8 percent a year. Soon Vietnam became one of the world’s biggest exporters of rice again.
In recent years, Vietnam has become an enticing proposition for multinationals hoping to sell their goods. The country has become a manufacturing hotspot at the expense of neighboring China where labor costs are much higher. Many companies also feel Vietnam is a stable place to base their operations for the long-term. The difference in the past 50 years is dramatic and can be seen in the economic health of Vietnam’s citizens. In 1975, 70 percent of Vietnamese people lived below the official poverty line. As of 2017, it was below 7 percent.
Today, Vietnam’s vitals are the strongest and healthiest they have ever been, with a future promising continued prosperity. THP started in 1994, just as private businesses became legal and the company just recently celebrated the opening of its fourth factory. THP invested $173 million in its latest factory which features the most modern aseptic technology in the region. This factory can produce 48,000 bottles per hour and ready to take on the international market. Learn more about how Vietnamese companies like THP have grown amongst this transition to become leaders in their respective industries by visiting my site.