Striving for Growth - HRD Country Profile of Viet Nam

United Nations ESCAP
HRD Section

Striving for Growth

HRD Profile of Viet Nam

FROM ESCAP HRD NEWSLETTER NO 7

Viet Nam is at the centre of international attention again. After 30 years of relative isolation in Southeast Asia, economic reforms and trade liberalization have spurred foreign investment to flow into the country. We look here at some indicators of the HRD situation in Viet Nam, a critical factor in the country's economic development drive.

Viet Nam has recently experienced impressive economic growth, generating a 35% increase in GNP between 1990 to 1995. It has been described as an emerging Asian tiger, but its economy overall is still that of a tiger cub. In 1994, its 73 million people produced a GNP of some $ 16 billion, just over one-tenth of Thailand's. The average per capita income, at some $ 220 per year, is commensurate with those of the least-developed countries of Asia.

Population growth is also close to that of the poorer countries of the region; data for the 1990s suggest a growth rate of over 2% per year. Government attempts to control the population are currently being hampered by the cohort born during the post-war baby boom of the late 1970s, which has reached child-bearing age.

Despite its low per capita income and high population growth, the country has made significant advances in its HRD situation (see table below). Steady improvements in health indicators have been recorded over the past three decades. Life expectancy, birth rates and infant mortality rates are only slightly lower than those of the more developed neighbouring countries in Southeast Asia. Much of this performance can be attributed to a comprehensive system of health delivery, which, until recently, was provided solely by the State.

In basic education, improvements have also been recorded. Literacy is almost universal at 95 percent. There is only a small gap between urban and rural, and male and female literacy rates, reflecting the availability of basic education for all.

Viet Nam in ASEAN: Behind in Income, but Equal in HRD

Despite its low per capita income, Viet Nam's HRD indicators are at par with those of its new ASEAN partners

Country	GNP per capita	Adult literacy	Life expectancy (years)	Access to health services	Access to safe water
Malaysia	$ 2,830	82%	71	n.a.	78%
Thailand	$ 1,840	84%	69	90%	77%
Philippines	$ 790	94%	66	76%	82%
Indonesia	$ 680	83%	63	80%	51%
Viet Nam	$ 220	92%	65	90%	84%

Data for 1992. Access to health services and safe water as percentages of the total population. Sources: United Nations, UNDP, EIU.

Notwithstanding these achievements, a large part of the population, possibly 40-50 percent, still lives in poverty, with the great majority in the rural areas. It is debatable whether economic reforms permitting the freer interplay of market forces have had a real impact in improving the incomes and standard of living of the majority of the population. Available data suggest that the reforms have been in place for too short a period to significantly alleviate poverty. Despite this, they have provided the people with many new employment opportunities that would have been unthinkable just five years ago.

Viet Nam's road to prosperity is being greatly facilitated by the recent influx of foreign investment. Also, its entry into ASEAN in July 1995 is expected to stimulate increased trade with the other members, and beyond. Foreign investment has, however, been confined to a few industrial sectors in selected regions of the country. As of early 1996, a third of foreign direct investment (FDI) in Viet Nam has been in the hotel and tourism sector. Economic growth has largely been concentrated in two major cities, Hanoi, and Ho Chi Minh City and its immediate vicinities. Initially, the limited purchasing power in the domestic market, and rigidities in the establishment of joint ventures with state enterprises were seen as disincentives for investment. Nevertheless, Viet Nam appears to have made adequate investments in human resources to provide for a solid basis for further investment and economic growth.

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