Monday, January 4, 2010

Vietnams economy and the future - face reality

On the weekend I read the probably best article about the economic reality in Vietnam since a long time. It was published by Thanh Nien News in a special report. If you, dear reader, are interested in Vietnams development, then read carefully what the experts say about the middle income trap. Some quotes:

Jonathan Pincus, dean of the Fulbright Economics Teaching Program, said Vietnam’s approach to lower middle-income status is still based on growth that draws from “moving people out of very low-productivity activities.


Growth for middle-income countries must be based on “mastering new technologies, producing more sophisticated goods, breaking into new markets and improving workers’ skills,” Pincus said.


The country’s development has been “passive,” dependent on the “liberalization effect” after doi moi and large inflows of investment, capital and aid, and unable to create “internal value” to ensure sustainable growth.


Vietnam is still some years away from the middle-income trap, he said, “but since it takes a long time to build the institutions of a modern economy, it is never too early to start.”


Why do I like this article so much? Because it show the reality: Vietnam may developed a middle class, but this class represents a small percentage and is mainly based on cash. People got rich and wealthy by selling assets like land and gold, some by getting licences from foreign companies. The Vietnamese value comes only from rice, coffee and fish. There is no industrial good Vietnam is able to export. Beside food there is not much left that is produced in Vietnam. so the country needs innovation and improvment. That's the challenge for 2010.

3 comments:

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tienpoo said...

All of the ideas you've just made-up above are somewhat true but most of them are just a no-ground guess.

Who is your expert? who is the expert you mentioned above? No name, no author or not any citing proof.

In economy field, every country who participate must bear a risk. There is nothing 100$ safe to go for. Life a pool of risk, and only fit for who ca judge how much risk they are going to bear.

What grade are you in, Thomas Wanhoff?

Thomas Wanhoff said...

Tienpoo, I would recommend you these articles:
The income trap http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/CHINAEXTN/0,,contentMDK:21284107~menuPK:318956~pagePK:2865066~piPK:2865079~theSitePK:318950,00.html

Vietnam reform proposals irk investors http://search.ft.com/search?queryText=vietnam

Vietnam exports: http://www.wolframalpha.com/input/?i=vietnam+exports

I mentioned an article above and within an expert. But even without you can clearly see that there is a bubble in real state. And: Investment realization is around 10 to 20 percent, yet the official number is 30 percent. We should have learned from the economic crisis that the threat is if your business is based on expectations rather than operational income. You call it risk, and yes, you need risks in business. But you also need to know the consequences.