Vietnam is one of the stars of the emerging economies. Catapulted into the ranks of a middle-income country in one generation, Vietnam successfully reduced extreme poverty within its borders from 50 percent in 1990 to around 2 percent in 2018. The private sector has played a central role in the country’s outstanding development journey, from boosting investments and growth to creating productive jobs, underpinned by Vietnam’s embrace of trade openness and an export-oriented growth model. The country had been poised for its next phase of economic transformation—then the COVID-19 crisis hit.
Nevertheless, a productive private sector remains integral to Vietnam’s recovery and ambition of becoming a high-income country by 2045. Boosting productivity-led growth requires exploiting the full potential of the private sector by reducing constraints on entry, increasing the competitiveness of firms, upgrading in global value chains, diversifying into new markets, and deepening digitalization across sectors. This CPSD diagnoses what can be done now to get Vietnam back on track, strengthening private sector development and attracting investments through an innovation-driven and inclusive growth model. It argues that the COVID-19 crisis can serve as a catalyst for tackling incomplete structural reforms and an opportunity to upgrade the country’s human capital, green its infrastructure, and deepen innovation in financial services and capital markets.