CHAP 2:
1. Which factors of production dominate economic growth of Vietnam?
+ Human capital: The Vietnamese population is growing, and it is growing fast. In
2020, it was estimated to be around 97 million people, making Vietnam the
fifteenth-most populous country in the world. A majority of its population is of
working or below working age, with 63% between the ages of 15-54. With a
median age of 31 years, Vietnam finds itself, for now, in a demographic golden
age.
That is, however, poised to change. While the population is still growing, birth
rates are falling, and life expectancy is rising. Although an increased life
expectancy is a sign of Vietnam’s explosive economic growth and progress, it will
in time become a major public policy concern for the nation.
The rapid ageing of Vietnam’s population will dramatically increase the burden of
dependency and increase the demand for social support services such as healthcare,
housing, income security and the overall welfare system. Moreover, a rapid
decrease of its workforce will most likely affect its per capita growth between 2020
and 2050, and decrease overall productivity.
+ Natural capital: Natural capital is an invaluable asset for Viet Nam and plays an
important role in the strategy of socio-economic development and environmental
protection. Natural capital includes geological elements, soils, air, water, and all
living organisms that provide people with a wide range of free goods and
ecosystem services, which underpin Viet Nam’s economy and society. Natural
capital is considered a firm foundation for the development of a sustainable green
economy in Viet Nam. Values of ecosystem services, national parks, nature
reserves, natural heritages, biosphere reserves, Ramsar sites or ASEAN heritage
parks are the basis for developing green economic sectors such as eco– and
spiritual tourism. Moreover, they are carbon sinks and water storage tanks and
create renewable and clean energy. The functions and values of Viet Nam’s natural
capital are huge, and therefore constitute a central theme in Viet Nam’s strategy on
sustainable development.
+ Physical capital: Over the past 30 years, the provision of basic services has
improved significantly. Access of households to infrastructure services has
increased dramatically. As of 2016, 99 percent of the population uses electricity as
their main source of lighting. Access to clean water in rural areas has also
improved. However, in recent years, Vietnam’s physical capital investment as a
percentage of GDP has been among the lowest in the ASEAN region. This will
create challenges for continued growth of modern infrastructure services required
for the next phase of growth.
+ Technological knowledge: The knowledge economy relies more and more on
scientific and technological achievements, including Researching and creating new
technologies and new products. Therefore, the formation and development of
intellectual resources is an important task today in order to bring the country to fast
and sustainable development.
The Industrial Revolution 4.0 demonstrates the role of scientists participating in
the production process in order to transform creativity and knowledge into
production, creating a new wave in innovation. Besides the participation of many
other components, such as engineers, technology enterprises, start-up enterprises...
CMCN4.0 is the optimal combination of the system of advanced technologies
deployed into production. industry and services, finance, environment, society,
resources… based on digital and physical foundations, advanced materials
technology and biotechnology, communication technology…
2. Why do you think the economic productivity of Vietnam is much
smaller than other neighbor countries?
Productivity is rising, but not as fast as wages, creating the risk of an economic
imbalance. Average productivity in Vietnam increased by 36 percent from
VND38.64 million per worker in 2006 to VND60.73 million in 2017, according to
the Vietnam Annual Economic Report 2018. However, the level is still below
Japan, South Korea, China, Singapore, Thailand, Malaysia, the Philippines,
Indonesia and Cambodia.
The study also outlined issues with the country’s young workforce, as 60 percent of
young laborers with lower and upper secondary education are working in the
informal sector (for example, a family business), which are generally considered
areas of low productivity, precarious employment, and unstable incomes.
Nearly a half of young workers have a qualification mismatch, and 33% are not
qualified for what they do. Around 70% of young workers do not have social
insurance, but wages continue to increase rapidly, it added.
Due to the small size of Vietnam’s economy. With a low starting point, small
economic scale, narrowing the relative gap in average income and labor
productivity of Vietnam with other countries over the past time is a remarkable
achievement but not enough to earn a profit. narrow the absolute gap in labor
productivity value compared with other countries in the region. In addition, the
process of economic restructuring is positive but slow. Industries and services,
especially those that are the driving force or lifeblood of the economy such as
finance, banking, and tourism, still account for a low proportion.
3. Do you believe that in 2050s, the Vietnamese economy will be greater
than those of Italy and Thailand? Please explain?
I strongly believe that the Vietnamese economy will be greater than those of Italy
and Thailand in 2050. This is due to the fact that Vietnam is forecast to be one of
the fastest-growing economies in Southeast Asia, despite the impact of COVID-19.
After COVID-19, the economy is expected to rebound at a growth rate of 6.8
percent in 2021 with continued strong growth. Researchers believe that by 2030,
Vietnam’s GDP in PPP would be the 29th in the world, valued at $1.303 trillion,
while the figure would be $3.176 trillion by 2050. If so, Vietnam’s economy would
surpass many other big economies such as Thailand, and Italy. PwC predicts
Vietnam, India, and Bangladesh will be the three fastest-growing economies
between now and 2050, with an average annual growth of around 5%. These three
countries have the advantage of a young, rapidly growing workforce. To reach
their potential, according to PwC, the growth of these three countries needs to be
supported by sustainable economic reforms, strengthening macroeconomic,
institutional, and educational factors.
4. Vietnam is an exporter or importer? IMPORTER
(Nhập siêu: https://vneconomy.vn/am-anh-nhap-sieu-quay-tro-lai.htm )
Vietnam is an import surplus country. After many years of continuous export
surplus, in the first 5 months of 2021, import has returned. The expansion of
production after the previous three Covid-19 epidemics has boosted the demand for
imported input materials of domestic enterprises. This is also the reason given by
the Ministry of Industry and Trade to explain the trade deficit in the first half of
this year. According to a report by the General Statistics Office, the total import–
export turnover of goods in the first five months of 2021 reached US$262.25
billion, up 33.5% over the same period in 2020. In which, exports reached 130.94
billion USD, up 30.7%; imports reached 131.31 billion USD, up 36.4%. The
growth rate of import turnover was higher than export turnover, causing a trade
deficit of 369 million USD in the first 5 months of the year.
Specifically, in the past 5 months, the domestic economic sector had a trade deficit
of 12.74 billion USD, while the FDI sector (including crude oil) had a trade surplus
of 12.37 billion USD. This means that the trade surplus is completely dependent on
the FDI sector and as long as this sector slows down, the economy will return to
the state of trade deficit. The most obvious proof is when the fourth wave of the
Covid-19 epidemic broke out in early April 2021, causing production activities of
FDI enterprises in industrial parks, especially in Bac Giang and Bac Ninh
provinces. severely affected, many businesses had to suspend operations, which
affected production and export results.
If there is no solution to limit the trade deficit, the long-term trade deficit and
especially the trade deficit of consumer goods will partly cause negative impacts
on the economy. The high import of consumer goods, especially luxury consumer
goods, will reduce the competitiveness of domestic goods, causing difficulties for
domestic production activities.
Vietnam is an export surplus country. Located in a strategic position for foreign
companies with operations throughout Southeast Asia, Vietnam is an ideal export
hub to reach other ASEAN markets. These trade agreements made Vietnamese
exports will be freely accessible to many of the world’s largest markets with few
tariffs or restrictions. In the first quarter of 2021, there are 11 items with export
turnover of over 1 billion USD, accounting for 76.6% of total export turnover (4
items with export turnover of over 5 billion USD, accounting for 54.7%). Textiles
consistently rank among Vietnam’s leading export industries, with over 6000
textiles and garments manufacturing companies, employing upwards of 2.5 million
workers. The growth of the garment industry has been impressive. Vietnam has
emerged as an important electronics exporter, with electrical and electronic
products overtaking coffee, textiles, and rice to become the country’s top export
item. Samsung is Vietnam’s largest exporter and has helped the country achieve a
trade surplus for the first time in many years. Moreover, Vietnam is the second
largest rice exporter in the world, behind only the nearby country of Thailand. The
climate and geography of the Mekong Delta lend to this. About an entire third of
that export, in 2020, was exported to the Philippines, with China being another
figure.
5. What is 5 main export products of Vietnam?
The following export product groups represent the highest dollar value in
Vietnamese global shipments during 2020. Also shown is the percentage share
each export category represents in terms of overall exports from Vietnam.
1) Electrical machinery, equipment: US$153.5 billion (44.1% of total exports)
2) Machinery including computers: $23.9 billion (6.9%)
3) Footwear: $23.8 billion (6.8%)
4) Clothing, accessories (not knit or crochet): $15.5 billion (4.5%)
5) Furniture, bedding, lighting, signs, prefab buildings: $15.5 billion (4.4%)
Vietnam’s top 5 exports accounted for over three-quarters (77.1%) of the overall
value of its global shipments.
Machinery including computers was the fastest grower among the top 10 export
categories, up by 82.3% from 2019 to 2020. In second place for improving export
sales was furniture, bedding, lighting, signs and prefabricated buildings via a
63.2% gain. Vietnam’s shipments of electrical machinery and equipment posted
the third-fastest gain in value up by 58%.
At the more granular four-digit Harmonized Tariff System code level, phone
system devices including smartphones are Vietnam’s most valuable exported
