Vietnam A Successful Development Process - 2161 Words

Macroeconomic Overview of Vietnam Vietnam has gone through a successful development process, known to be one of south east Asia’s fastest growing economy and could possibly become a developed nation by 2020 (BBC News, 2014). Vietnam was once one of the poorest countries in the world in 1986 with per capita income below $100. As of present, Vietnam has transformed into a lower middle income country with per capita income of $1,960 by 2013 (The World Bank, 2014). Vietnam’s GDP per capita have been rising every year as shown in Fig. 1. Fig. 1 Vietnam’s GDP Per Capita from years 2004 to 2014 (Trading Economics, 2014). Vietnam has also had success in reducing poverty, from nearly 60% of people living in poverty falling to 20.7% in 2010 and†¦show more content†¦Vietnam has achieved impressive progress towards poverty reduction and economic growth. According to OECD (2014) this was largely due to the ‘Doi Moi’ economic reform process which involves a series of structural changes that made Vietnam into one of the fastest growing economies in the world. Doi Moi was initiated in 1986 and the goal was to create a ‘social-oriented market economy’. In recent years, Vietnam is known for their leading agricultural exports and foreign investment destination. According to Trading Economics (2014), â€Å"Vietnam s key products are: rice, cashew nuts, black pepper, coffee, tea, fishery products and rubber† and also known to be the third largest oil reserve in Asia (EIA, 2014). These are key contributions toward Vietnam’s GDP growth rate shown in Fig. 3. Fig. 3 Vietnam’s Annual GDP Growth Rate between years 2004 to 2014 (Trading Economics, 2014). Over the years, Vietnam’s balance of payments displayed large current account deficits in years between 2008 to 2010 but reached a surplus from 2011 and onwards (Vietnam Report, 2013). Vietnam’s balance of payments gained surplus in years 2011 and 2012, first half of 2012 there was a surplus of US$6.451 billion. The surplus have greatly helped Vietnam through improving its financial power, reducing inflation levels, stabilizing exchange rates and also help recover the country’s foreign reserve (Phuong, 2012). From onwards, Vietnam continues to show frequent trade surpluses as export growth have