Can Vietnam Achieve More Robust Economic Growth? Insights from a Comparative Analysis of Economic Reforms in Vietnam and China

Abstract

This paper conducts a comparative analysis of economic reforms in Vietnam and China to gain insights into critical reform areas that are imperative for Vietnam to achieve more robust economic growth. This study finds that the growth gap between the two countries has been substantial not only for GDP but also for labour productivity and total factor productivity, both of which are essential for sustainable economic performance in the long term. The main causes behind the growth disparity between Vietnam and China are governance-related factors, namely government effectiveness, regulatory quality, administrative reforms, state-owned enterprise reforms and policy experimentation efforts, along with induced elements such as education and technological upgrading. While China’s stronger performance does not imply that Vietnam should embrace the former’s growth model, the considerable performance gap between the two countries suggests that Vietnam has great potential to accelerate its own economic growth. The insights and discussion from this study indicate that Vietnam can achieve far more robust growth if it launches a new wave of reforms to effectively strengthen the aforementioned factors. This paper provides a suite of relevant and actionable policy recommendations for Vietnam to embark on this endeavour.