The Answer to this may surprise many. The most obvious and traditional contenders for this used to be China, India, and Japan. But this time the latest developments on the economic front in Asia have an unprecedented rise of a nation as the fastest growing economy of Asia and I am sure that the name will indisputably set the eyeballs rolling.
You will be surprised to know that the fastest-growing economy for 2022 is Vietnam with an unprecedentedly high rate of 8.01 percent.
So let us explore further how such a small country has surpassed the economies like India, China, and Japan. What are the actual reasons for the rise of Vietnam as the fastest-growing economy in Asia? Fastest Growing Economy in Asia-Fastest Growing Economy in Asia-Fastest Growing Economy in Asia
Let’s have a sneak peek at what is behind this growth miracle. According to World Bank and Brookings Institution economists, three major factors explain Vietnam's economic rise. "First, it has enthusiastically embraced trade liberalization. Second, it has supplemented external liberalization with policies and reforms such as privatization and reduced business costs. Finally, Vietnam has made significant investments in both physical and human capital, primarily through public investments."
It was not always like that. Only thirty years ago, the country was among the underprivileged on the Global Economic Market. How really does this Southeast Asian country rise to bottom third status?
And once the 20-year Vietnam War finished in 1975, the Vietnamese economy ranked among the world's poorest, and economy under the govt's successive five-year central plans was extremely weak. Per capita GDP was locked between $200 and $300 by the mid-1980s. Perhaps something happened. In 1986, the government announced "Đổi Mới", a sequence of political as well as economic changes and directed the country towards becoming a "socialist-oriented economic system".
Nowadays, Vietnam is a rising star in International markets. Its 6-7% economic growth competes China's, and it export markets. But this year it has surprising outpaced all other Asian countries and pegged economic growth rate an unprecedented high of 8.01 percent.
This ASEAN country produces everything from Nike sportswear to Samsung smartphones. Because of the achievement of these objectives, Sheng Lu, an associate professor at the University of Delaware, stated to the Financial Times that there are not many spare workers or manufacturing facilities left.
Concerning its first factor, analysts pointed out the numerous free-trade agreements by Vietnam over the past 20 years. Vietnam entered the ASEAN free trade zone in 1995. It agreed to sign a free trade deal with the United States in 2000, and it united with the World Trade Organization in 2007. And since, ASEAN has signed agreements with China, India, Japan, and Korea, and the revised Trans-Pacific Partnering became effective this year - albeit without the United States.
The cumulative impact of all of these contracts was to slowly reduce the tariff barriers on both goods imported and exported to and from Vietnam.Vietnam is now accepting business. Future Developments at BrookingsDomestic reforms were also part of the government's push towards the economic system. The country passed its first Foreign Investment Law in 1986, allowing foreign firms to come into the country. According to a 2016 report by law firm Baker & McKenzie, the law was revised several times since then, primarily to apply a more top-player strategy while attempting to minimize the administrative bureaucratic system and facilitate effective foreign investment into Vietnam.The efforts of Vietnam were not unobserved in global rankings. Vietnam climbed from 77th place in 2006 to 55th rank in 2017 in the World Economic Forum's annual Global Competitiveness Report. In the meantime, in the World Bank's ease of doing business rankings, Vietnam soared from 104th in 2007 to 68th in the year 2017. According to the World Bank, Vietnam made significant progress regarding everything from contract enforcement to raising access to credit and power generation, paying taxes, and cross-border trade last year.
Ultimately, Vietnam has made significant investments in human capital and infrastructural facilities. Faced with a rapidly increasing population (95 million, 50 percent of which are under 35, up from 60 million in 1986), Vietnam made a significant public investment in primary education.
It was essential because a rising population entails a greater necessity for jobs. However, Vietnam has also made an investment heavily in infrastructure, guaranteeing affordable mass internet connectivity. The Fourth Industrial Revolution is approaching Southeast Asia, and having a reliable IT infrastructure future-ready is critical.
All these investments were profitable. With the required infrastructure developed and market-friendly policy in place, Vietnam has become a Southeast Asian hot spot for foreign direct investment and production. Japanese and Korean electronics manufacturers such as Samsung, LG, Olympus, and Pioneer, as well as numerous European and American apparel manufacturers, have established themselves in the nation. According to the Financial Times, by 2017, Vietnam had been the region's leading exporter of apparel and the second-largest supplier of electronic goods.
Economic expansion jumped on board. Since 2010, Vietnam's GDP has grown at least 5% annually, peaking at 6.8% in 2017 and then becoming the fastest-growing economy in Asia at the rate of 8.01 percent in 2022. With such strong economic growth, the country went from being one of the poorest in the world to be comfortable position in mid-income. In 1985, its per capita GDP was just hardly $230; in 2017, it exceeded more than 10 times that ($2,343). When adjusted for purchasing power, it rises to more than $6,000.During the past thirty years, Vietnam's per capita GDP has grown ten - fold.During the past 30 years, Vietnam's per capita GDP has jumped ten - fold. Most notably, the economic expansion was equitably inclusive. Vietnam ranks first in the World Economic Forum's Inclusionary Development Index.Based on the World Economic Forum's Integrated Development Report, Vietnam is among the sectors of the economy that have done exceptionally well in attempting to make their progress workflow more sustainable and equitable. Women fared much better as well. According to the World Bank, their rate of employment is within 10 percent of that of men, and women-led households are far less likely to be poor than men-led households, though imbalances persist.Even so, one significant disadvantage is the govt's approach towards human rights and privacy. Press freedom in the country is one of the worst in the globe, residents are more monitored online, and human rights activists are not encouraged. Two human rights activists, for e.g., who were welcomed to this year's World Economic Forum on ASEAN, were refused entry into the country.Could anything halt Vietnam's rise? With so many regions of the country losing interest in globalization, Vietnam appears particularly susceptible, as the Financial Times revealed earlier this year. Its exports account for 99.2% of its GDP, and as previously demonstrated, the majority of its progress is centered on trade and foreign investment. Because of the strengthening dollar, it may lose favors as an investment destination in an emerging economy. Fastest Growing Economy in Asia-Fastest Growing Economy in Asia-Fastest Growing Economy in Asia
However, for the time being, Vietnam hopes to benefit rather than be harmed by rising global trade disputes. Although the United States has withdrawn from the Trans-Pacific Relationship, its hostility has so far had a larger effect on China than on Vietnam.The US government-imposed tariffs on hundreds of billions of dollars' worth of Chinese goods, prompting businesses with factories in China to think about moving to countries such as Vietnam.
Even if increased Western protectionism harms Vietnam, the country can still rely upon its own growing middle class to provide the next bump up to growth. Domestic and foreign retailers are looking to expand rapidly in the country as even more people receive the purchasing power to buy products and services. It is possible that, rather than the hustle and bustle of smaller stores and scooters, Vietnam will one day be defined by large malls and automobiles. However, for the time being, Vietnam is growing on its own and the tag of the fastest-growing economy in Asia suits its effective planning and management of economic affairs.
Fastest Growing Economy in Asia-Fastest Growing Economy in Asia-Fastest Growing Economy in Asia
Let’s have a sneak peek at what is behind this growth miracle.
According to World Bank and Brookings Institution economists, three major factors explain Vietnam's economic rise.
"First, it has enthusiastically embraced trade liberalization. Second, it has supplemented external liberalization with policies and reforms such as privatization and reduced business costs. Finally, Vietnam has made significant investments in both physical and human capital, primarily through public investments."
It was not always like that. Only thirty years ago, the country was among the underprivileged on the Global Economic Market. How really does this Southeast Asian country rise to bottom third status?
And once the 20-year Vietnam War finished in 1975, the Vietnamese economy ranked among the world's poorest, and economy under the govt's successive five-year central plans was extremely weak. Per capita GDP was locked between $200 and $300 by the mid-1980s. Perhaps something happened. In 1986, the government announced "Đổi Mới", a sequence of political as well as economic changes and directed the country towards becoming a "socialist-oriented economic system".
Nowadays, Vietnam is a rising star in International markets. Its 6-7% economic growth competes China's, and it export markets. But this year it has surprising outpaced all other Asian countries and pegged economic growth rate an unprecedented high of 8.01 percent.
This ASEAN country produces everything from Nike sportswear to Samsung smartphones. Because of the achievement of these objectives, Sheng Lu, an associate professor at the University of Delaware, stated to the Financial Times that there are not many spare workers or manufacturing facilities left.
Concerning its first factor, analysts pointed out the numerous free-trade agreements by Vietnam over the past 20 years. Vietnam entered the ASEAN free trade zone in 1995. It agreed to sign a free trade deal with the United States in 2000, and it united with the World Trade Organization in 2007. And since, ASEAN has signed agreements with China, India, Japan, and Korea, and the revised Trans-Pacific Partnering became effective this year - albeit without the United States.
The cumulative impact of all of these contracts was to slowly reduce the tariff barriers on both goods imported and exported to and from Vietnam.
Vietnam is now accepting business. Future Developments at Brookings
Domestic reforms were also part of the government's push towards the economic system. The country passed its first Foreign Investment Law in 1986, allowing foreign firms to come into the country. According to a 2016 report by law firm Baker & McKenzie, the law was revised several times since then, primarily to apply a more top-player strategy while attempting to minimize the administrative bureaucratic system and facilitate effective foreign investment into Vietnam.
The efforts of Vietnam were not unobserved in global rankings. Vietnam climbed from 77th place in 2006 to 55th rank in 2017 in the World Economic Forum's annual Global Competitiveness Report. In the meantime, in the World Bank's ease of doing business rankings, Vietnam soared from 104th in 2007 to 68th in the year 2017. According to the World Bank, Vietnam made significant progress regarding everything from contract enforcement to raising access to credit and power generation, paying taxes, and cross-border trade last year.
Ultimately, Vietnam has made significant investments in human capital and infrastructural facilities. Faced with a rapidly increasing population (95 million, 50 percent of which are under 35, up from 60 million in 1986), Vietnam made a significant public investment in primary education.
It was essential because a rising population entails a greater necessity for jobs. However, Vietnam has also made an investment heavily in infrastructure, guaranteeing affordable mass internet connectivity. The Fourth Industrial Revolution is approaching Southeast Asia, and having a reliable IT infrastructure future-ready is critical.
All these investments were profitable. With the required infrastructure developed and market-friendly policy in place, Vietnam has become a Southeast Asian hot spot for foreign direct investment and production. Japanese and Korean electronics manufacturers such as Samsung, LG, Olympus, and Pioneer, as well as numerous European and American apparel manufacturers, have established themselves in the nation. According to the Financial Times, by 2017, Vietnam had been the region's leading exporter of apparel and the second-largest supplier of electronic goods.
Economic expansion jumped on board. Since 2010, Vietnam's GDP has grown at least 5% annually, peaking at 6.8% in 2017 and then becoming the fastest-growing economy in Asia at the rate of 8.01 percent in 2022. With such strong economic growth, the country went from being one of the poorest in the world to be comfortable position in mid-income. In 1985, its per capita GDP was just hardly $230; in 2017, it exceeded more than 10 times that ($2,343). When adjusted for purchasing power, it rises to more than $6,000.
During the past thirty years, Vietnam's per capita GDP has grown ten - fold.
During the past 30 years, Vietnam's per capita GDP has jumped ten - fold.
Most notably, the economic expansion was equitably inclusive. Vietnam ranks first in the World Economic Forum's Inclusionary Development Index.
Based on the World Economic Forum's Integrated Development Report, Vietnam is among the sectors of the economy that have done exceptionally well in attempting to make their progress workflow more sustainable and equitable. Women fared much better as well. According to the World Bank, their rate of employment is within 10 percent of that of men, and women-led households are far less likely to be poor than men-led households, though imbalances persist.
Even so, one significant disadvantage is the govt's approach towards human rights and privacy. Press freedom in the country is one of the worst in the globe, residents are more monitored online, and human rights activists are not encouraged. Two human rights activists, for e.g., who were welcomed to this year's World Economic Forum on ASEAN, were refused entry into the country.
Could anything halt Vietnam's rise? With so many regions of the country losing interest in globalization, Vietnam appears particularly susceptible, as the Financial Times revealed earlier this year. Its exports account for 99.2% of its GDP, and as previously demonstrated, the majority of its progress is centered on trade and foreign investment. Because of the strengthening dollar, it may lose favors as an investment destination in an emerging economy.
Fastest Growing Economy in Asia-Fastest Growing Economy in Asia-Fastest Growing Economy in Asia
However, for the time being, Vietnam hopes to benefit rather than be harmed by rising global trade disputes. Although the United States has withdrawn from the Trans-Pacific Relationship, its hostility has so far had a larger effect on China than on Vietnam.
The US government-imposed tariffs on hundreds of billions of dollars' worth of Chinese goods, prompting businesses with factories in China to think about moving to countries such as Vietnam.
Even if increased Western protectionism harms Vietnam, the country can still rely upon its own growing middle class to provide the next bump up to growth. Domestic and foreign retailers are looking to expand rapidly in the country as even more people receive the purchasing power to buy products and services. It is possible that, rather than the hustle and bustle of smaller stores and scooters, Vietnam will one day be defined by large malls and automobiles. However, for the time being, Vietnam is growing on its own and the tag of the fastest-growing economy in Asia suits its effective planning and management of economic affairs.
