Can Vietnam be the new Singapore?

About this video

• Video Title: Can Vietnam be the new Singapore?
• Channel: The Economist
• Speakers: Not explicitly mentioned in the transcript.
• Duration: 00:10:11

Overview

This video discusses Vietnam's economic trajectory, examining its current export-led growth model, its vulnerabilities to US tariffs, and the challenges of transitioning to a higher-income economy. It draws parallels to Singapore's development model while highlighting the unique difficulties Vietnam faces due to its larger population and a global economic environment that is less conducive to manufacturing-led growth.

Key takeaways

• Export-Led Growth Vulnerability: Vietnam's economy, which relies heavily on foreign direct investment for assembly and export (with approximately 30% of its GDP coming from exports to the US), is significantly exposed to US tariff policies. A proposed 46% tariff by the US poses a fundamental threat to this model.
• Domestic Reforms: The Vietnamese Communist Party, under General Secretary Tolam, is undergoing significant restructuring. There's a shift towards encouraging a higher risk appetite within the bureaucracy, fostering innovation, increasing R&D spending, and elevating the private sector's contribution to GDP from half to 70%.
• Comparison with Singapore: Vietnam's economic model is compared to Singapore's, particularly its focus on attracting foreign direct investment. However, Vietnam's larger population and the need to create jobs for its workforce present a greater challenge than for the city-state.
• Challenges of Development: The video highlights that climbing the development ladder is harder for middle-income countries today. High-value industries are dominated by established economies, and Vietnam must find ways to capitalize on emerging technologies from a lower baseline, potentially by fostering domestic consumption and adapting its manufacturing base.
• Historical Context: Vietnam's rapid development is remarkable, especially considering its economy had a very limited formal private sector before the 1980s and 1990s. This rapid growth has been driven by channeling rural labor into factories, a model that is beginning to show signs of slowing down as wages rise.