Vietnam and the Path to Becoming a High-Income Nation by 2045

Over the past three decades, Vietnam has achieved remarkable economic feats, becoming one of the fastest-growing economies in the world. Since the Doi Moi (Renovation) reforms in the late 1980s, Vietnam has transformed from a poverty-stricken nation into a major manufacturing hub in Southeast Asia. By 2023, exports contributed nearly 100% of GDP, with a significant increase in high-tech products.

However, Vietnam’s current growth model remains heavily reliant on assembly and final-stage processing with low value-added output. Most domestic enterprises are yet to integrate deeply into global value chains. According to a World Bank report, only 18% of Vietnamese businesses were connected to global value chains in 2023, a drop of 17 percentage points from 2009.

This necessitates a fundamental shift in Vietnam’s economic development approach, focusing on high-tech, skill-intensive industries and services. While current achievements provide a solid foundation, realizing the 2045 goal will require overcoming numerous structural, workforce, and infrastructure challenges.

Countries like Japan, South Korea, and Singapore have faced similar challenges and succeeded by prioritizing investments in technology, education, and innovation. A key lesson is transitioning from labor-intensive industries to skill-intensive, technology-driven sectors.

South Korea, for instance, successfully reshaped its economy through policies that encouraged research and development (R&D), supported private enterprises, and fostered an innovation ecosystem. Vietnam can learn from and adapt these strategies to its domestic context to maximize its potential.

Additionally, improving the education system and enhancing workforce quality are prerequisites. With only around 10% of the population holding bachelor’s degrees, Vietnam lags behind many regional peers in workforce education. A more flexible education system aligned with labor market needs is essential. Special focus should be placed on STEM fields (Science, Technology, Engineering, and Mathematics) to prepare the workforce for future industries.

Vietnam’s development cannot be isolated from global dynamics. The current international trade system is undergoing significant shifts due to geopolitical tensions, climate change, and technological advancements. While supply chains are being restructured, this presents both opportunities and challenges.

Opportunities arise from Vietnam’s deep participation in wide-ranging free trade agreements (FTAs) such as the CPTPP and RCEP. These agreements not only facilitate Vietnam’s access to international markets but also serve as catalysts for domestic reforms.

Climate change also poses significant threats to Vietnam’s economy. With most industrial zones concentrated in coastal areas, the risks of flooding and rising sea levels are high. Vietnam needs to develop strategies to mitigate climate change impacts, such as transitioning to green production and building more resilient infrastructure.

To achieve the goal of becoming a high-income nation by 2045, Vietnam must implement coordinated and long-term strategies.

1. Improving the Business Environment
The government must create favorable conditions for domestic enterprises to integrate into global value chains. This could include tax reforms, reducing administrative barriers, and enhancing transparency in economic governance.

2. Investing in Digital Infrastructure and Technology
Investment in digital infrastructure and technology is vital. Vietnam must fully leverage the potential of digital technologies to boost labor productivity and expand service industries. Supporting small and medium enterprises (SMEs) in accessing technology and international markets is an effective way to foster broader private-sector participation.

3. Developing Human Capital
Human resource development is crucial. Alongside higher education, vocational training and lifelong learning programs should be expanded to help workers adapt to economic changes. Early education investments, particularly in remote areas, will help close developmental gaps and ensure inclusive growth.

The goal of becoming a high-income nation by 2045 is ambitious but achievable. Vietnam has the potential to realize this dream by seizing opportunities, addressing challenges, and implementing appropriate strategies. Economic growth must go hand in hand with innovation, sustainable development, and social equity. It is time for Vietnam to take bold actions to write the next chapter in its development story and assert its position on the global economic map.