Analysis of Vietnam’s Economy

Analysis of Vietnams Economy Table of contents (Jump to) 1. Introduction 2. Why Vietnam – An overview 3. Theoretical literatures 3.1. Macroeconomic principles 3.2. Microeconomic principles 4. The level of unemployment and employment 4.1. Before the national reform – The beginning of the 1990s’ 4.2. After the national reform 5. Skills needed and skills gaps 5.1. Disadvantages 5.1.1. Low IT skill availability 5.1.2. Low English proficiency level 5.2. Advantages 5.2.1. High tech sector 5.2.2. Textiles and garments sector 6. Conclusion Bibliography 1. Introduction The trend of global outsourcing has accelerated the economic activities in developing nations. Developed nations countries have gained the economy of scales and performed major functions in the long-term basis. The advantages of outsourcing are to reduce business operation expenses and thus corporations can sustain competitiveness. The paper will discuss the Vietnamese economy, particularly skills needed and skills gaps, and the level of unemployment and employment. Some theoretical literatures will help explain the reasons and results of Vietnamese economic growth; the paper tries to access the underlying forces which have challenged Vietnam authority to change from the central control to the market economy. 2. Why Vietnam – An overview Vietnam officially becomes the 150 th member in WTO (World Trade Organization) on 11th January 2007. In order to join WTO, Vietnam government has to change its political, infrastructure and economic principals to fulfill the requirements of this international organization. ‘A sustained boom, with annual economic growth consistently around 7%-8% since 2000, has transformed Vietnam. It is over 20 years since Vietnam’s ruling communists abandoned collectivism and embarked on their doi moi market-based reforms, not unlike those China adopted a few years earlier.’ [1] Additionally, Vietnam economy has gradually changed in order to adapt and join the worl d economy. From the control economy as of the principal of the communist ideals, Vietnam has undergone the reform and has let its economy to react in accordance with the law of supply and demand. Accordingly, ‘Real GDP growth is forecast to be robust in 2007, at an average of 7% a year, and will be driven mainly by industrial expansion. Business sentiment and consumer confidence will remain resilient, boosting investment and consumption.’ [2] In fact, ‘Many Southeast Asian economies, namely, Malaysia, the Philippines, Singapore, and Vietnam are emerging as an outsourcing destination for some Fortune-500 companies.’ [3] The data from the Vietnamese economy has strongly reflected how outsourcing impacts on the level of unemployment and employment and skills needed and skills gaps, since the economy has moved so fast to the integration into the world economy. Vietnam has positioned itself as a primary host by luring more investment than other emerging econo mies and developing nations in the region in the late 1990s. It is overtaking the Philippines and Indonesia. ‘By 2002, Viet Nam was the third largest recipient of foreign direct investment (FDI) flows in ASEAN [Association of South East Asian Nations], behind Singapore and Malaysia, strengthening its position as a significant investment base. Viet Nam has therefore achieved a key position both in terms of prime investment host within the region, and as a recipient of intraregional inflows.’ [4] 3. Theoretical literatures 3.1. Macroeconomic principles A concept of scarcity, relatively in relation to an entire country and its people, becomes a condition which individual producer and consumer have to face in every decision. The opportunity cost of each decision can be considered as subjective value that individual must scarify when making any decision for the next best alternatives.