Last update: 08:00 | 31/03/2019
The economic lag was manifested by many indicators, including productivity, competitiveness and GDP per capita.
Vietnam’s GDP per capita has been increasing rapidly for many years since doi moi (renovation), and the first years of 1990s, but there still exists a big gap between Vietnam and the region and the world.
In 2008, Vietnam joined the club of the countries with lower average income. Vietnam takes pride in its GDP growth rate which is among the highest in the world.
However, it is necessary to look at the situation realistically and admit that Vietnam is still facing the risk of lagging further behind in GDP per capita. Here are some figures calculated based on statistics from the General Statistics Office (GSO) and the State Bank of Vietnam.
In comparison with the world
In 1990, the average GDP per capita based on real prices of the world was $4,168 (the GDP per capita based on purchasing power parity PPP was $4,836). Meanwhile, the figures were $98 ($970) for Vietnam, which meant a big gap of $4.070 ($3,866).
In 2012, the figures were $10,178 ($12,207) and $1,749 ($3,620), respectively, for the world and Vietnam. By that time, or after 22 years, the gap had become wider, $8,429 ($8,857), or a doubling of the gap.
In the 1990-2017 period, Vietnam’s GDP per capita lagged further behind regional countries.
In 1990, Indonesia’s nominal GDP per capita was $487 higher than Vietnam’s, while its GDP per capita based on PPP was higher by $2,051. In 2017, the gaps soared by 2.99 times (to $1,458) and 2.59 times (to $5,315), respectively.
In 1990, Thailand’s GDP per capita was higher by $1,410 and $3,359 than Vietnam’s, while the difference soared to $4,205 and $11,095, respectively, or by 2.98 and 3.3 times.
The difference between Vietnam’s and South Korea’s GDP per capita is even bigger. In 1990, the difference was $6,418 and $7,337, while in 2017, the figures were $27,354 and $31,484.
South Korea is a big story. Its GDP per capita was $100 in 1960 and $6,516 in 1990, which means that the figure soared by 65 times just within 30 years. In 2017, its GDP per capita was reported reaching $29,743.
Meanwhile, Vietnam’s GDP per capita increased much more slightly within 30 years, from $100 in 1990 to $2,389 in 2017, an increase of 24 times. The noteworthy point is that South Korea obtained such high growth rates in the context of poorer conditions of land, natural resources and climate than Vietnam.
South Korea, right from the very beginning, did not intend to attract foreign direct investment.
Vietnam’s GDP per capita based on the 2017 price was $2,389, or 24 times higher than 1990 ($98). But the figure was just equal to Malaysia’s GDP per capita in 1990 ($2,441), Thailand’s in 1993 ($2.208), and Indonesia’s in 2008 ($2,300).
As such, Vietnam has lagged behind Malaysia by 27 years, behind Thailand 23 years and behind Indonesia and the Philippines by nine to 10 years.
It will be difficult for Vietnam to catch up to regional countries in GDP per capita. If Vietnam obtains 5 percent economic growth rate by 2035, or after nearly 20 years, its GDP per capita would be equal to 83 percent of Thailand’s current GDP per capita.
If the economic growth rate is higher, 7 percent, for 20 consecutive years, Vietnam’s GDP per capita by 2035 would be equal to 98 percent of Malaysia at this time.