As Vietnam aspires to become a high-income country, it is time to redefine its export strategy and tackle the challenges of achieving sustainable growth. The World Bank’s recent report, “Vietnam 2045: Trading Up in a Changing World,” offers critical analyses and recommendations that demand serious consideration. Bitter reality Despite Vietnam’s impressive export achievements, deeper scrutiny reveals concerning issues. Over the years, foreign direct investment (FDI) enterprises have accounted for as high as 70% of the nation’s export revenue, raising questions about the sustainability and inclusiveness of this growth model. The dominance of the FDI sector underscores a “dual economy” characterized by limited connectivity between foreign-invested and domestic businesses. As highlighted in the World Bank report, this lack of connection prevents local firms from leveraging global opportunities, stunting their potential growth. First, although Vietnam’s growth relies heavily on exports, domestic businesses remain largely excluded from global value chains. In 2023, FDI companies contributed 73% of Vietnam’s export revenue. By contrast, only 18% of domestic businesses were linked to global value chains, down by 17% against 2009. Second, the connection between FDI enterprises and those of Vietnam remains limited. According to the Organization for Economic Cooperation and Development (OECD), FDI manufacturing firms […]
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