Vietnam is still considered a lower middle-income country by the World Bank and a frontier market by major index providers — which means the country is thought to be less established and riskier to invest in. But that's still a long way from the time when it was one of the poorest nations in the world, economists noted.
Many experts have attributed Vietnam's rise to a series of policies called "doi moi" that were introduced in 1986 to grow the private sector and open up the country to foreign investors, among other things.
Source: ANZ Bank
Those policies "dramatically transformed the country, spurring fast economic and social development," Manop Udomkerdmongkol, economist at Singapore's United Overseas Bank, said in a recent report. "The key part of this reform was freeing up domestic trade and investment."
It came at a time that many factories wanted to diversify their manufacturing bases by moving some operations out of China, which resulted in a surge in foreign direct investments into cheaper destinations such as Vietnam.
In a report last year, World Bank economists said Vietnam has attracted more than 10,000 foreign companies, mostly in export-oriented and labor-intensive manufacturing sectors.
Vietnam now has one of the highest numbers of free-trade agreements among Asian countries.
That led to an improvement in several areas (all figures by the World Bank):
- Gross domestic product grew $26.337 billion in 1986 to $223.78 billion in 2017
- GDP per capita, a measure of wealth, increased from $421.659 in 1986 to $2,342.244 in 2017