Challenges and Strategies for Viet Nam in Escaping the Middle-Income Trap

Quang-Thanh Tran, Duc-Thinh Bui, Minh-Chau Pham and Anh Nguyen
Additional contact information
Duc-Thinh Bui: Development and Policies Research Center
Minh-Chau Pham: Development and Policies Research Center
Anh Nguyen: Development and Policies Research Center

No 202, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: Viet Nam has reached upper-middle-income status in 2025 and has set its sights on high-income status by 2045. To achieve this goal, it must sustain, on average, a per-capita growth rate of at least 7 percent a year for two decades, something most middle-income economies have never succeeded in doing. In this paper, we analyze what may stand in Viet Nam's way, via five channels: demography and labor, industrialization, infrastructure, institutions, and technology. Benchmarking Viet Nam against the East Asian economies that graduated to high income, and against Southeast Asian peers of comparable size, we find that each constraint binds earlier in Viet Nam's income trajectory than it did for any successful graduate. The demographic window is closing at a lower income level; manufacturing has plateaued, with low domestic value added in exports remaining a chronic problem; infrastructure quality and institutional capacity remain short of what higher-value production requires; and the country is currently underutilizing the human capital it builds. Against this diagnostic, we assess the government's 2024--2026 reform program and recommend where it needs to go further: industrial and infrastructure deepening, labor formalization, technology absorption and institutional and competition reform.

Keywords: middle-income trap; Viet Nam; industrialization; global value chains; productivity; demographic transition; human capital; institutions (search for similar items in EconPapers)
JEL-codes: O11 O14 O25 O40 O53 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2026-08, Revised 2026-08
References: Add references at CitEc
Citations:

Downloads: (external link)
http://depocenwp.org/modules/download/index.php?id=202 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:0202

Access Statistics for this paper

More papers in Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam Contact information at EDIRC.
Bibliographic data for series maintained by Doan Quang Hung ().