Name: Vietnam’s Insane Economic Boom Explained
Uploaded: 2026-02-11T13:49:30.000Z
Duration: 8 min 57 s
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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

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the economy was so unproductive that it had to import food, despite being mostly agrarian.

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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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 Khmer 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 centralised form of economic planning.

But by the mid-80s, 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 mid-80s, the government embarked on a series of liberalising reforms with the aim of transforming Vietnam's command economy into a more market oriented one.

The CPV were at least partly inspired by opening up reforms implemented by Deng Xiaoping in China in the late 70s, 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 up to 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.

First, Vietnam's enthusiastic embrace of free trade, which began with the aforementioned 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 liberalisation 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 labour costs.

Vietnam has also been a beneficiary of manufacturers efforts to de risk 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

There was some anxiety that Trump, who threatened Vietnam with an eye watering 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.

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.

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 1/10 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 capitas.

A well educated workforce is one of the big reasons why Vietnam has, unlike other middle income 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 their 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.

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 defence 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 the power to make things happen, but

also who has the sway to make sure it does.

That's why last year we put together a list of the world's 25 most influential people, using rankings from you, our audience, as well as from our journalists.

This year we've done the same, producing a brand new ranking for 2026.

In the upcoming issue of our magazine Too Long, we explore our list, telling the stories of a number of people who made the list, from the return of Donald Trump and the calculated moves of Xi Jinping to the AI frontiers of Sam Altman.

We look to the new entries New York's first Muslim mayor, Zoran Mamdani, the radical shift of Pope Leo xiv, and

bastions of technocracy like Prime Minister Mark Carney, as well as the shadows that still linger like Jeffrey Epstein.

As always, this issue of Too Long features a whole lot more than just our most influential people ranking, though we also have a whole featured segment on how the UK became more divided than ever and how a broken country could rebuild, the fragmentation emerging within the eu, how religion is being used by politicians around the world, and

You can pre order your copy at Toolong News, or to get the best deal you can, just subscribe to the magazine.

Doing so gets you 20% off every copy for the lifetime of your subscription, and

if you use code SPRING26, you'll get an additional £3 off your first copy, bringing the price as low as £4.99.

Find out more and order your copy today at Toolong News.