Globalization goes through difficult times. Britain’s exit from the EU, the rise of nationalist US President Donald Trump and the escalating trade dispute between the US and China are hampering progress towards a more connected global economy. International trade as a share of GDP fell from 60% in 2011 to 56% in 2016, one other sign of the sick health of globalization.
If there’s a turn against globalization, we can’t realize it by Vietnam’s economy. In 2017, Vietnam’s trade as a percentage of GDP reached over 200%. This is the best level amongst all countries with greater than 50 million inhabitants, in line with World Bank data from 1960. Among the world’s twenty most populous countries, it overtook second-place Thailand with 122%.
The measure is calculated by adding the worth of exports and imports after which dividing this value by GDP. Countries with high measures are inclined to be wealthy and small. In Hong Kong, Singapore and Luxembourg, rates exceed 300%. Companies in these countries produce products for export since the domestic market is simply too small, absorbing all their production. As a big and poor country, Vietnam is an exception.
Vietnam’s exceptionally globalized economy is the results of a give attention to exports to make sure economic growth. Like China before it, communist-ruled Vietnam opened its low-cost labor market to foreign investors and have become a middle of low-cost production. The country is currently a significant exporter of electronics and clothing, and the foremost recipients of its goods are the United States and China. To produce these goods, Vietnam is a significant importer of machinery parts and natural resources from South Korea and China.
Globalization has been good for Vietnam. GDP per person has increased from about $1,500 in 1990 to about $6,500 today. Unlike some rapidly growing economies, recent prosperity has been made available. The percentage of individuals living in extreme poverty has fallen from over 70% within the early Nineties to around 10% in 2016. In a recent report, the World Bank recognized that the roles created by Vietnam’s export sector have contributed to this remarkable poverty reduction.
The Vietnamese have seen the advantages of globalization. As my former colleague Matt Phillips noted, in a 2014 Pew Research survey, 95% of Vietnamese said “trade is good.”
While globalization has mostly been a boon for Vietnam, having such a globally integrated economy carries risks. If the United States or China decides to shut down their economy, Vietnam will likely be in deep trouble. Countries with similar wealth, similar to Nigeria and the Philippines, are insulated from the economic whims of world powers because they’re more focused on their domestic markets.
There are also limits to Vietnam’s desire for globalization. The recent decision by the Vietnamese government to permit foreigners to lease land in special economic zones within the country for 99 years (paywall) has sparked huge protests. Vietnamese protesters fear that Chinese business interests will gain an excessive amount of power within the country.
Source: World Economic Forum
