This case study illustrates Viet Nam’s progress in economic development. The story describes the nature of the progress, analysis of the factors that have contributed to progress and lessons for policy makers.

Viet Nam’s recent economic development has been exceptional. In the 1970s, the country was emerging from decades of war, which had decimated the country and its infrastructure and left many people dead and millions injured or displaced. Now Viet Nam is set to join the ranks of middle-income countries by 2011.

After the reunification of the North and the South in 1975, Viet Nam faced an economic crisis and declining standards of living, including serious food shortages. This undermined the legitimacy of the government. In response, the government began a process of economic reforms, shifting towards a market-based economy by using a trial-and-error approach. A decisive political shift came in the late 1980s, and this enabled significant economic, social and political reforms which contributed to noteworthy improvements in economic conditions and in human development. Equity and social cohesion were important components in these reform policies, as the government saw these as crucial to maintaining its legitimacy.

The rate of economic growth and poverty reduction since the 1990s has been unsurpassed by most developing countries, although challenges remain with regard to rising inequality, environmental degradation and corruption.