Why Vietnam is Still Poor
There are no simple, straightforward answers as to why some countries are poor. There are
many factors that come into play as to their poor state and some are controversial, but
nonetheless factual.
When looking at different nations of the world, economists use gross domestic product (GDP)
per capita as an indicator of a country’s economic well-being. GDP is the total market
value of all final goods and services that a particular economy produces in a year.
To become a high-income country by 2045, Vietnam needs to sustain average growth rates of at
least 7% in the years ahead. While the country has the means to do this, without reform,
it will just slow down and remain poor.
Vietnam – Many Living Below the Poverty Line
When you divide a country's GDP by its population, you get an idea of how much income, on average,
the economy produces for each person each year. GDP is a measure of a nation’s standard
of living.
It is interesting to note however, that some developing countries have a higher GDP than
developed countries. A country is thought to be poor if its people don’t have a certain
living standard.
There are many people in Vietnam who don’t have a good living standard. Just how poor
is this Southeast Asian country on the South China Sea? Should the country be poor seeing
that it has a long coastline with top-notch harbors as well as a vibrant tourism industry?
● Poverty
Half of Vietnam’s population among ethnic minorities still live below the poverty line.
People from these ethnic minority backgrounds are isolated, not only geographically but
socially too.
The government has at least tried to address this problem and they instituted their CEMA
committee - Committee for Ethnic Minority and Mountainous Area Affairs. They want to
work to improve education as well as social opportunities for this particular population.
Vietnam is a very populous country with close to 100 million people, but a good percentage
of the people live in poverty. Factors that have contributed to poverty include large
families even when parents are unemployed. This is one of the controversial topics that
people don’t like to address but which is a stark reality. Then there is also a lack
of education and lack of skills.
Based on the drop in the country’s poverty rate between the years 2010 and 2014, conditions
in the nation definitely improved. However, issues such as a poor education system, a
poor and deteriorating infrastructure as well as ethnic discrimination, is still threatening
its growth in 2019.
● Mismanagement of Funds
The United States has been strategizing with Vietnam. The idea being to transform the country
into a more sustainable developing one. To this end a 5-year plan was developed in 2014.
Millions of dollars have been allocated to improve not only trade but to also develop
higher education.
In fact the country has set Sustainable Development Goals or SDGs, achievable by 2030. These are
goals to improve the healthcare system, tackle issues of equality and improve the country’s
poverty rate.
These seem like good plans to pull Vietnam out of poverty, so why is Vietnam still poor?
Where is all the financial help and transformation efforts going? It’s not as though there
wasn’t an improvement, but in spite of some true successes for Vietnam, poverty remains
an issue.
● Resisting Western Influence
There are political experts who believe that Vietnam is still poor because they resisted
Western influence in the 19th century. It is still having negative repercussions. Their
resistance to this influence caused the country to fall behind advanced countries, becoming
prey for imperialist powers.
● No Infrastructure – No Private Sector Growth
Failing infrastructure though, still remains one of the reasons that the country remains
poor. Efforts have been made to bring electricity to everyone but their infrastructure systems
for water, sanitation, energy and telecommunication is still not good, and the private sector
can’t grow.
The government’s approach to infrastructure development hasn’t been driven, and some
small developments have scarcely made a difference. What the government needs to do is to accelerate
productive investment – to boost the productivity of the country’s huge labor force with investment
in infrastructure, machinery, and technology. Of course, it will require a more efficient
financial system.
The country’s Socio-Economic Development Strategy for 2016-2020 acknowledges these
problems as reasons why the country can’t rise out of its poverty. It does however seem
to realize the need to change things and accelerate progress.
● Corruption in High Places
Many people say that the country’s infrastructure is lacking because of corruption within Vietnam’s
leadership. They reckon that Vietnam’s government is corrupt.
When you look at the Corruptions Perceptions Index world, Vietnam doesn’t rank well.
All the money supposed to be going towards health care, education and infrastructure
is going straight into the pockets of many government officials. They make business deals
that benefit them but cause damage to the state budget and also damage to the economy.
The sad reality is that Vietnam’s actual quality of life isn’t poor because its people
are uneducated or lazy. No, most Vietnamese are hard-working, aspirational people who
want a decent life for themselves and their families. But they have to contend with their
corrupt government. They should be demanding accountability from these people.
● Natural Hazards
Unfortunately, if it’s not the government, the country also has its fair share of natural
hazards such as flooding. The country has a super long coastline – 3200km long, and
most of its population lives in coastal areas and low-lying deltas.
The country is also heavily exposed to climate change and this is expected to increase sea
levels and coastal flooding. Flooding causes major problems in Vietnam and this natural
disaster increases poverty.
Poor people often take longer to recover from a flood because of no insurance and limited
or no borrowing capacity. Government is supposed to offer support after a flood, but this is
often inadequate to support losses.
A Turbulent Past
Decades of war between 1945–75 have taken their toll on the country for sure, and until
1989, much of the government’s resources went into the occupation of Cambodia and a
border war with China.
Vietnam was both politically and economically isolated from countries such as China and
the USA, keeping a trade embargo in place. A process of reform began but trade with America
and neighboring countries only started really in 1994. By then Vietnam’s economy was in
a mess.
Vietnam has enjoyed growth in the reform era, from 1994 till now, and it is perhaps not
ranked as one of the world’s poorest countries anymore, but mismanagement and corruption
in high places may well ensure that this country doesn’t move up to where it belongs.