Vietnamese economy at the crossroads: New doi moi for sustained growth

Abstract

Thanks to doi moi, Vietnam was successful in escaping the poverty trap and emerged as a lower middle-income country in the late 2000s. From that time, however, the Vietnamese economy entered a new phase, which has been characterized by slow growth, weak international competitiveness, and macroeconomic instability. Apart from short-term problems associated with the management of increasing foreign capital, the major factors accounting for the difficulties of Vietnam's current economic phase can be attributed to the Vietnamese style of the gradualist strategy of transition from a planned to a market economy, which protects state-owned enterprises, and consequently to the failure to respond to the rapid rise of China. For further industrialization and sustained growth, Vietnam should embrace a new doi moi that follows the efficient type of gradualist strategy, with a special focus on new reforms of state-owned enterprises and a policy that promotes the country' s dynamic comparative advantage. © 2013 The Author. Asian Economic Policy Review © 2013 Japan Center for Economic Research.