Vietnam Economic Structure

 

 

Historically an agricultural country, Vietnam’s economy was dependent on wet rice cultivating. Upon consolidating power after the Vietnam War, the Government collectivized farms and factories and employed millions in government services. Vietnam’s centralized economy remained plagued with restrictions on economic trade for a decade. The country struggled under the fetters of trade embargoes placed by the US and Europe after the War. However, the Sixth Party Congress introduced some momentous economic reforms in 1986, which resulted in a socialist-oriented economy.[br]

 

Between 1990 and 1997, Vietnam achieved approximately 8% yearly GDP growth, and 7% GDP growth between 2000 and 2005, becoming the world’s second fastest progressing economy. Agricultural dependency in the financial output had shrunk from 25% in 2000 to 20% in 2007. Poverty level had also declined and Vietnam had succeeded in creating job opportunities for the vast labor force. However, the economic slump in 2008-2009 made it difficult to continue with the job generation endeavors. To stem high inflation, Vietnamese authorities increased the benchmark interest rates. Hanoi is targeting at a growth rate of 7.5 to 8% till 2011-12.

 

Vietnam Economic Structure: Divisions into Sectors

Vietnam’s economic structure is classified into the following sectors:

 

Primary Sector: From 1994 to 2004, agriculture and forestry grew at a yearly rate of 4.1% and contributed 21.8% to the GDP in 2004. The agricultural output declined but employment in this sector remained comparatively higher. In 2005, 60% of the labor force was concentrated in agriculture, forestry and fishing; although agricultural produce was responsible for merely 30% of exports. The reduction of government monopoly on rice exports converted Vietnam into one of the world’s largest rice exporter.

 

Secondary Sector: Since years, Japan has been aiding Vietnam to develop its auxiliary industries. From 2008 till date, Japan has given approximately US$180 million as aid to finance SMEs. The country has already built supporting industry zones in several places including the Que Vo district and the Bac Ninh province. There is a high prospect of developing supporting industries, such as garment, textile, leather, electronics, IT, automobile and engineering. Priority is also being given to livestock and aquaculture industries. Latest technology and business solutions are being employed to serve the increasing domestic and export demands.[br]

 

Tertiary Sector: By 2010, the insurance sector was expected to account for 4.2% of the GDP via increase of life and non-life insurance premiums to $2 billion and $562 million respectively. This would be a result of the manufacture of innovative products and sale channels.