Vietnam faces challenges in escaping middle income trap: experts

By Dat Nguyen   October 30, 2019 | 06:00 pm GMT+7
Vietnam faces challenges in escaping middle income trap: experts
A man works at a mechanical factory in Hanoi. Photo by Reuters/Kham.

Vietnam is struggling to get out of the middle income trap, its per capita GDP far behind the world average, an MP says.  

"Vietnam’s economy grows about 7 percent annually, among the fastest in the world, but actual GDP per capita figures show that we are falling behind other countries," Hoang Quang Ham, a standing member of the National Assembly’s Finance and Budget Committee, said this at a pariamentary session Wednesday.

Vietnam’s GDP per capita in 2017 was $2,365, compared to the world average of $10,770, according to the World Bank. Last year, as the country’s GDP per capita rose to $2,563, the world increased to $11,298.

Other experts expressed similar concerns. Economist Nguyen Tri Hieu said Vietnam has been stuck in the middle income trap for years and will face major challenges in reaching a per capita GDP of $10,000.

In Asia, South Korea, Japan and Singapore were able to escape the trap by having political and economic institutions that encouraged breakthrough innovations, but this has not happened in Vietnam, he said.

The government needs to focus on technological development to simplify administrative procedures for businesses, and at the same time, streamline policies to support startups as that’s where innovative ideas typicall come from, he added.

Fellow economist Le Dang Doanh said that small and medium businesses need to receive practical training in adopting information technology advances and increase e-commerce trade.

Vietnam’s GDP growth was 7.08 percent last year, highest in a decade, and is set to reach 6.8 percent this year, according to official estimates.

 
 
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