Vietnam’s Insane Economic Boom Explained

A few decades ago, Vietnam was quite

literally one of the poorest countries

in the world. GDP was stagnant. It did a

negligible amount of trade with the rest

of the world, and the economy was so

unproductive that it had to import food

despite being mostly agrarian. Today,

however, this has all changed. Vietnam

is both one of the most open and fastest

growing economies in the world, and its

GDP is now expected to overtake that of

Thailand, one of the richest countries

in the region sometime this year. So, in

this video, we thought we'd take a look

at Vietnam's economic miracle, what's

driving it, and how it's weathered the

protectionism we've seen in recent

years.

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bell. So to understand quite how

incredible Vietnam's economic boom has

been, you need a bit of context. After

the Vietnam War against the US, which

finished with the unification of North

and South Vietnam in 1975, Vietnam was

somewhat unsurprisingly quite literally

one of the poorest countries in the

world. According to UN data, in 1975,

Vietnam had a GDP per capita of just $84

at current prices, roughly a quarter

that of Thailand and even less than

Cambodia, which was then ruled by Kime

Rouge and entering the first phase of

the Cambodian genocide. The ruling

Communist Party of Vietnam or CPV

originally tried to essentially mimic

the Soviet Union, pursuing a centralized

form of economic planning. But by the

mid80s, it had become apparent that this

wasn't really working. GDP per capita

had barely budged and the Soviet Union

itself was showing signs of decline. So

in the mid80s, the government embarked

on a series of liberalizing reforms with

the aim of transforming Vietnam's

command economy into a more

marketoriented one. The CPV were at

least partly inspired by opening up

reforms implemented by Deng Xiaoping in

China in the late '7s, which paved the

way for an economic boom that began in

the 80s and is continued to this day.

Anyway, these reforms were remarkably

successful. According to UN data,

Vietnam's GDP per capita quadrupled

between 1990 and 2000 and then

quadrupled again between 2000 and 2010.

According to World Bank data, which is a

bit more upto-date than the UN data

we've been using so far, Vietnam now has

a GDP per capita of nearly $5,000,

roughly double that of Cambodia and

Laos, higher than that of the

Philippines and on par with Indonesia.

It's hard to overstate quite how

impressive this is. In 1990, Vietnam was

way poorer than all these countries and

has since seen by far and away the

fastest growth in the region. Nor are

things showing any signs of slowing

down. Growth came in at 8% in 2025, well

above estimates, and the government has

set a target of 10% for 2026.

In terms of aggregate GDP, Vietnam is

now expected to overtake Thailand in the

coming years, a prospect that would have

been unimaginable a decade or two ago.

So, what's driven this boom? Well, we

see at least three big reasons. First,

Vietnam's enthusiastic embrace of free

trade, which began with the

affforementioned reforms, does seem to

have really paid off. Vietnam joined

ASEAN in 1995, signed a free trade

agreement with the US in 2000, and

joined the World Trade Organization in

2007. The net effect has been to

dramatically reduce Vietnam's trade

barriers, and Vietnam is now one of the

most trade dependent economies in the

world with total trade amounting to 174%

of GDP. Economic liberalization has also

attracted copious amounts of foreign

investment largely as a consequence of

big multinationals setting up shop in

Vietnam to take advantage of the

relatively low labor costs. Vietnam has

also been a beneficiary of manufacturers

efforts to derisk their exposure to

China. Companies like Google, Microsoft,

and Apple have all shifted parts of

their supply chain out of China and into

Vietnam in recent years as part of

what's become known as the China plus

one strategy. This has all helped

Vietnam establish itself as a

manufacturing powerhouse, exporting not

just to the West, but also to nearby

Asian countries. There was some anxiety

that Trump, who threatened Vietnam with

an eyewatering 46% tariff on Liberation

Day, would throw a spanner into all

this, but the CPV have actually handled

him remarkably well. They promptly

negotiated a new tariff rate of 19%.

Which was low enough to keep Vietnamese

exports competitive. Anyway, the second

reason is human capital. Vietnam has

pretty great demographics. It has a

large and relatively young workforce

with a median age of about 33 and thus a

relatively low so-called dependency

ratio. That is the number of dependents

relative to working age people. But it's

not just demographic structure.

Vietnam's population is also incredibly

well educated. In the latest PISA

rankings, for instance, Vietnamese

students scored about on par with the

OECD average despite being quite

literally the poorest country to take

part and having a GDP per capita roughly

onetenth that of the OECD average. It's

hard to overestimate quite how

impressive this is. In maths, Vietnamese

students actually outperformed their

counterparts in the US and way

outperformed their peers in Indonesia

and the Philippines, two nearby

countries with similar GDP per capita. A

well educated workforce is one of the

big reasons why Vietnam has unlike other

middle- inome countries been able to

move up the manufacturing value chain

with high-tech products accounting for

an ever growing fraction of all exports.

This is also one of the big reasons why

Vietnam's score on the World Bank's

human capital index, which combines

indicators of health and education into

a measure of the human capital that a

child born today can expect to obtain by

the 18th birthday, is somewhat

astonishingly on a par with that of the

US and Luxembourg, despite being many

times poorer. Finally, Vietnam's economy

benefits from the country's relatively

progressive attitudes towards the role

of women in the workforce. Low female

labor participation rates have often

been a barrier to economic development

in middle-income countries, but Vietnam

has quite literally one of the highest

rates in the world, exceeding even the

OECD average. The third and final reason

is political stability. The CPV have

proved remarkably competent stewards and

embarked on successive liberalization

drives to make the country more

attractive to foreign businesses. These

seem to have paid off. According to the

Economist Intelligence Unit, between

2003 and 2023, Vietnam's business

environment improved more than that of

any other country. Now, to be clear,

this is not a general defense of

authoritarianism over democracy, and

Vietnam's political system is

appallingly repressive in certain

respects. Nonetheless, it's hard to deny

that Vietnam's relative political

stability has helped its economy. And

the comparison with Thailand, where

recurrent political crises have given

way to economic stagnation, is telling.

As is so often the case these days, a

lot of how this plays out depends on

influence. Not only who technically has

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telling the stories of a number of

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return of Donald Trump and the

calculated moves of Xi Jinping to the AI

frontiers of Sam Olman. We look to the

new entries, New York's first Muslim

mayor, Zoran Ramdani, the radical shift

of Pope Leo I 14th and bastions of

technocracy like Prime Minister Mark

Carney, as well as the shadows that

still linger like Jeffrey Epstein. As

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influential people ranking, though. We

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and how a broken country could rebuild.

the fragmentation emerging within the

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