Reinterpreting Vietnamese Industrialization: Another Southeast Asian (Paper) Tiger?

This paper delves into the transformation of East Asia's economic landscape post-World War Two, with a special emphasis on Vietnam's developmental path in the context of regional shifts. It evaluates the effects of the 'doi moi' reforms initiated in 1986, which, despite some successes, have led to limited advancements in fostering sustainable internal capabilities and in establishing a robust export-oriented manufacturing sector. The paper points out a notable trend: leading Vietnamese firms, including state-owned enterprises, predominantly engage in protected, non-tradable sectors such as real estate and finance, rather than in manufacturing. A critical examination reveals that Vietnam's governance structure and industrial policy approach contribute to its mixed economic performance. The absence of a dominant coordinating body or ministry in Vietnam, unlike the models seen in earlier East Asian industrializers, has resulted in ineffective policy execution and a governance model marked by decentralization and inefficiency. The paper concludes with a poignant argument: Vietnam's economic journey only loosely mirrors that of the early East Asian industrializers. The concern of Vietnam falling into a middle-income trap looms large, as its largest firms lack the dynamism to compete internationally. Promises of reform, while welcome, have also not been as forthcoming or consequential as initially expected. The paper calls for a radical overhaul in governance and policymaking to steer Vietnam away from mediocrity and towards a more promising economic future.