T1: Present the Overview of Economic Growth in Vietnam: Characteristics, Sustainability, and

Policy Implications
Economic growth is defined as the sustained increase in a country’s production of goods and services over a period,
typically measured by Gross Domestic Product (GDP). For Vietnam, the transition from a centrally planned economy to a
market-oriented model since the Đổi Mới reforms in 1986 has made it one of the fastest-growing economies in Southeast
Asia. However, while this growth has reduced poverty and integrated Vietnam into global value chains, questions remain
about the sustainability of its growth model. This essay will discuss the key characteristics of Vietnam’s economic
growth, assess its sustainability, and propose policy recommendations to address existing challenges.
Main Characteristics of Vietnam’s Growth Model
First, Vietnam’s growth is export-oriented.
Exports play a vital role in Vietnam’s economy, contributing to 89% of GDP in 2022. Key sectors include electronics (38%
of total exports), textiles, and agriculture. Vietnam is a global leader in rice, coffee, and seafood exports, thanks to its
comparative advantages in labor costs and natural resources. Trade agreements like the CPTPP and EVFTA have further
expanded Vietnam’s market access, making it a critical player in global supply chains.
Second, Vietnam relies heavily on foreign direct investment (FDI).
FDI has been a cornerstone of Vietnam’s industrialization and technology transfer. In 2022, the country attracted $27.72
billion in FDI, with major contributions from South Korea, Japan, and Singapore. This influx has fueled the development
of electronics, real estate, and manufacturing industries. However, Vietnam’s dependency on FDI raises concerns about
its vulnerability to global economic shifts and profit repatriation by foreign investors.
Third, Vietnam’s industrial growth is labor-intensive.
Low-cost labor has enabled Vietnam to thrive in manufacturing industries like textiles and footwear. With a workforce of
over 55 million in 2023, Vietnam is a leading hub for labor-intensive production. While this model has generated
employment, it limits the transition to high-value, innovation-driven sectors.
Finally, urbanization and infrastructure development are key drivers of growth.
Vietnam’s urban population has increased from 33% in 2012 to 41% in 2022, supported by significant investments in
industrial zones, highways, and ports. Infrastructure projects like the North-South Expressway have enhanced
connectivity and trade efficiency. However, rural areas lag behind, highlighting regional disparities in development.
Is Vietnam’s Growth Model Sustainable?
Strengths
First, Vietnam has shown economic resilience.
Vietnam’s diversified exports and stable macroeconomic policies have enabled it to weather global crises, such as the
COVID-19 pandemic. For example, GDP growth rebounded to 8.02% in 2022, the highest in over a decade.
Second, Vietnam benefits from a young and dynamic workforce.
A large labor pool underpins its competitive advantage in labor-intensive industries. This demographic dividend can be
leveraged for skill development and productivity enhancement.
Challenges
First, environmental degradation threatens long-term sustainability.
Rapid industrialization has caused severe air and water pollution, especially in urban centers like Hà Nội and Hồ Chí Minh
City. The Mekong Delta, a critical agricultural hub, faces significant threats from climate change, including rising sea
levels.
Second, over-reliance on FDI and low-value manufacturing limits economic self-reliance.
Vietnam’s dependence on assembling low-value goods and foreign capital leaves it vulnerable to supply chain disruptions
and global economic downturns.
Third, skill gaps hinder the transition to a high-tech economy.
Vietnam’s workforce lacks proficiency in advanced technical skills and English, restricting its competitiveness in
technology-driven industries.
Finally, regional inequalities exacerbate socio-economic challenges.
Urban areas reap most economic benefits, while rural regions face inadequate access to education, healthcare, and
infrastructure.
Policy Implications for Sustainable Growth
First, Vietnam must diversify its economy.
Shifting from low-value exports to high-tech and value-added production is crucial. Policies should promote innovation
through R&D investments and support for startups in sectors like AI, robotics, and renewable energy.
Second, investing in human capital is essential.
Improving STEM education and vocational training will equip the workforce with the skills needed for emerging
industries. Additionally, enhancing English proficiency will boost Vietnam’s integration into the global knowledge
economy.
Third, green growth must be prioritized.
Vietnam can align economic development with environmental sustainability by expanding renewable energy capacity,
such as solar and wind projects in Ninh Thuận and Bình Thuận. Stricter environmental regulations and incentives for
eco-friendly businesses are also necessary.
Finally, reducing regional disparities is critical.
To ensure balanced development, Vietnam should invest in rural infrastructure and provide incentives for businesses to
operate in underdeveloped regions. Enhanced access to healthcare, education, and technology in rural areas can bridge
the urban-rural divide.
Conclusion
Vietnam’s economic growth model has achieved significant success, transforming the country into a major exporter and
manufacturing hub. However, sustainability challenges such as environmental degradation, reliance on FDI, and skill gaps
must be addressed. By diversifying its economy, investing in human capital, and prioritizing green growth, Vietnam can
secure long-term economic resilience while ensuring equitable development. Strategic and forward-thinking policies will
enable Vietnam to not only sustain its economic success but also enhance its global competitiveness.

T2: ECONOMIC PRODUCTIVITY

Economic productivity, reflecting how efficiently resources are used to generate goods and services, is a key driver of
sustainable growth. For Vietnam, productivity improvements have been instrumental in its transformation from a
low-income to a middle-income country. However, despite notable progress, Vietnam still lags behind regional peers in
key productivity metrics, raising concerns about its ability to maintain high growth rates. This essay examines Vietnam's
current productivity landscape (using the latest data), identifies challenges, and proposes actionable solutions.
1. Current Status of Economic Productivity
Vietnam has made substantial gains in productivity over the past decade but remains below regional and global
benchmarks.
First, labor productivity in Vietnam reached approximately $10.7 per hour in 2023, more than double the $4.7 per hour in
2010. This improvement was driven by structural shifts from agriculture to manufacturing and services. However,
Vietnam’s productivity lags far behind countries like Malaysia ($28 per hour) and Singapore ($68 per hour) in 2023.
Second, total factor productivity (TFP) contributed 42.5% to GDP growth in 2022, an increase from 33.6% in 2015. This
reflects improvements in efficiency and innovation, but it remains below the contributions seen in advanced economies
like South Korea, where TFP accounted for over 50% of GDP growth in 2023.
Third, while Vietnam’s youthful and dynamic labor force is an advantage, over 28% of workers in 2023 were employed in
agriculture, which typically has lower productivity compared to manufacturing and services. Additionally, the dominance
of the informal sector, which employed 56.2% of the workforce in 2023, limits overall productivity improvements due to
its lack of technological adoption and efficiency.
2. Challenges in Economic Productivity
Vietnam faces several barriers to improving productivity:
First, its reliance on labor-intensive industries such as textiles and footwear limits the adoption of advanced
technologies. Small and medium enterprises (SMEs), which accounted for 97.4% of all businesses in 2023, often lack
resources to invest in automation and Industry 4.0 technologies. This technological lag reduces efficiency and global
competitiveness.
Second, infrastructure bottlenecks remain a significant hurdle. Vietnam’s logistics costs represented 20% of GDP in
2023, compared to 8–10% in developed economies. Inefficient transportation networks and energy constraints hinder
productivity in manufacturing and exports.
Third, skill gaps in the workforce remain a pressing issue. While Vietnam achieved a 97.8% literacy rate in 2023,
technical and vocational training remains underdeveloped. Low proficiency in English (Vietnam ranked 60th in the 2023
EF English Proficiency Index) also limits access to global opportunities in IT and export-oriented services.
Fourth, environmental issues and unsustainable practices in agriculture reduce productivity. The reliance on traditional
farming methods and the impacts of climate change, such as erratic rainfall and salinization in the Mekong Delta, further
constrain growth in agricultural output.
3. Solutions to Improve Economic Productivity
To address these challenges, Vietnam must adopt a comprehensive strategy:
First, infrastructure development should be a top priority. Expanding transportation networks, such as completing the
North-South Expressway by 2030, and modernizing ports will reduce logistics costs and improve trade efficiency.
Additionally, strengthening digital infrastructure, including nationwide 5G coverage, will support digital transformation in
businesses.
Second, fostering technological adoption is essential. The government should introduce tax incentives and grants to
encourage SMEs to invest in Industry 4.0 technologies like IoT, AI, and robotics. Partnerships with foreign investors can
also accelerate the establishment of innovation hubs and R&D centers.
Third, workforce development must focus on equipping workers with relevant skills. Expanding vocational training
programs to cover industries like renewable energy and IT is critical. The “National Program for Digital Transformation by
2030” should emphasize improving digital literacy, coding skills, and English proficiency to enhance global
competitiveness.
Fourth, promoting sustainability in agriculture is necessary. The government should support the transition to high-value
crops and adopt smart farming technologies, such as precision irrigation systems. Expanding access to solar-powered
equipment can further enhance efficiency and reduce environmental impacts in rural areas.
Conclusion
Economic productivity is pivotal to sustaining Vietnam’s rapid economic growth and improving its global
competitiveness. While Vietnam has made notable progress in labor productivity and TFP growth, challenges such as
technological lag, infrastructure bottlenecks, and skill deficits remain significant. By prioritizing infrastructure
modernization, fostering technology adoption, investing in human capital, and promoting sustainable practices, Vietnam
can bridge the productivity gap with regional peers and achieve long-term prosperity. These measures will ensure
Vietnam’s growth remains inclusive, resilient, and sustainable.

T3: CLIMATE CHANGE

Climate change, defined as long-term changes in temperature, precipitation, and weather patterns, is a critical challenge
for nations worldwide. For Vietnam, with its long coastline and reliance on agriculture and fisheries, the risks posed by
climate change are particularly severe. Rising temperatures, erratic rainfall, and more frequent extreme weather events
are already threatening Vietnam's economy, environment, and livelihoods. This essay examines the current state of
climate change in Vietnam, its economic impacts, and proposes policy solutions for mitigation and adaptation.
1. Current Status of Climate Change in Vietnam
Vietnam is experiencing significant climate-related changes, with rising temperatures and shifting weather patterns
becoming more apparent. First, average annual temperatures in Vietnam have increased by approximately 0.5°C since
1965, and projections indicate they could rise by another 3.4°C by 2100 under high-emission scenarios. This warming
trend exacerbates droughts and heatwaves, affecting water supplies and agricultural yields.
Second, precipitation patterns have become increasingly erratic. While northern regions are experiencing reduced
rainfall, southern coastal areas are facing higher-than-average rainfall, leading to frequent flooding. For example, annual
rainfall in the Mekong Delta is projected to increase by 5-15% by 2100, severely impacting rice production and
infrastructure.
Third, sea-level rise is a pressing concern for Vietnam, with levels expected to rise by 30–100 cm by the end of the
century. Already, coastal erosion affects over 460 km of Vietnam’s coastline, with rates reaching up to 10 meters
annually. This poses significant risks to Vietnam's coastal cities, including Hồ Chí Minh City and Đà Nẵng, where much of
the country’s economic activity is concentrated.
2. Impacts of Climate Change on Vietnam’s Economy
The economic repercussions of climate change are evident across multiple sectors. First, the agriculture sector, which
employs nearly 30% of the workforce, is particularly vulnerable. In 2023, floods and storms damaged over 350,000
hectares of crops, with rice fields in the Mekong Delta suffering losses of over 70%. Salinity intrusion caused by rising
sea levels further reduces the arability of farmland, endangering food security.
Second, the fisheries sector is at risk, with rising sea temperatures and ocean acidification projected to reduce fishery
yields by 10–30% by 2050. This decline could cost the economy over $1 billion annually, threatening livelihoods in coastal
communities.
Third, Vietnam’s industrial sector faces disruptions from extreme weather. In 2023, heavy rains caused unprecedented
flooding at key industrial zones, damaging equipment and halting production. Transportation infrastructure also suffers
frequent damage, with landslides and flooded roads disrupting supply chains and increasing costs for businesses.
3. Policy Recommendations for Mitigation and Adaptation
Addressing climate change requires comprehensive mitigation and adaptation strategies. First, Vietnam must
accelerate its transition to renewable energy. Projects like solar and wind farms in Ninh Thuận and Bình Thuận provinces
have shown promise, and expanding these initiatives can reduce the country’s reliance on coal-fired power plants, which
account for over 50% of energy production.
Second, building climate-resilient infrastructure is essential. Strengthening coastal defenses, modernizing irrigation
systems, and investing in green urban development can help mitigate the impacts of rising sea levels and flooding. For
instance, elevating roads and reinforcing dikes in vulnerable regions like the Mekong Delta would protect critical
infrastructure.
Third, international cooperation is crucial. Vietnam should continue leveraging funding and expertise from global
organizations like the World Bank and the European Union. Between 1993 and 2020, Vietnam received over €1.9 billion in
climate-related official development assistance (ODA), which has been instrumental in funding renewable energy and
adaptation projects.
Conclusion
Climate change poses a significant threat to Vietnam’s economy and environment, with impacts already being felt in
agriculture, fisheries, and industrial sectors. However, Vietnam has the opportunity to mitigate these risks through a
combination of renewable energy investments, resilient infrastructure, and international partnerships. By prioritizing
these strategies, Vietnam can protect its people, safeguard its economy, and contribute to global efforts to combat
climate change.
Vietnam's labor force, one of its greatest economic assets, plays a crucial role in the country's rapid industrialization and
global integration. With over 52.2 million workers in 2023, Vietnam has capitalized on its youthful and dynamic workforce
to become a key player in global manufacturing and services. However, challenges such as skill mismatches, informal
employment, and an aging population threaten its ability to sustain this progress. This essay explores Vietnam's labor
force in the context of international economic integration, highlighting key characteristics, challenges, and potential
policy responses.
T6: LABOR FORCE
1. Overview of Vietnam’s Labor Force
Vietnam’s labor force is characterized by a young and diverse population, with 75% of the population aged 15 and above
participating in the workforce. First, the labor force is shifting from rural to urban areas due to industrialization. Between
2020 and 2023, urban employment grew by 8.85%, while rural employment declined by 10.8%, reflecting increased
migration to cities for industrial and service jobs.
Second, sectoral distribution has seen a significant shift. In 2023, only 27.1% of workers were employed in agriculture,
down from 47% in 2013, while the industry and services sectors absorbed 33.9% and 39% of the labor force, respectively.
This trend illustrates Vietnam’s ongoing transition from an agrarian economy to one dominated by higher-value sectors.
Third, Vietnam’s workforce is becoming more educated, with 27.2% of workers holding degrees or certificates in 2023.
However, skill gaps persist, particularly in high-growth sectors like technology and renewable energy, where vocational
and technical training remains underdeveloped.
2. Challenges in Vietnam’s Labor Force
2.1 Skill Mismatches and Low Productivity
Despite improvements in education, Vietnam faces significant skill mismatches. Many graduates lack the technical and
managerial skills demanded by industries such as IT and electronics. For example, while Vietnam produces a high number
of STEM graduates, only a fraction are adequately trained for high-tech industries. This mismatch limits productivity,
which remains low compared to regional peers. In 2023, Vietnam’s labor productivity was $10.7/hour, compared to
$28/hour in Malaysia and $68/hour in Singapore.
2.2 High Informal Employment
Informal employment remains prevalent, with 64.9% of the workforce engaged in informal jobs in 2023. This limits
access to social protections such as healthcare and retirement benefits, increasing workers’ vulnerability to economic
shocks. Informal workers also face poor working conditions and lack opportunities for skill development, further
constraining economic growth.
2.3 Aging Population
Vietnam is undergoing a rapid demographic shift, with individuals aged 60 and above comprising 13.9% of the population
in 2023, up from 11.9% in 2019. By 2050, this figure is projected to exceed 25%, posing challenges for labor supply and
increasing dependency ratios. The aging workforce threatens productivity and demands urgent reforms to sustain
economic momentum.
2.4 Uneven Regional Development
Urban areas enjoy better access to education, infrastructure, and job opportunities, while rural regions face limited
development. In 2023, only 18.4% of rural workers had vocational training, compared to 42% in urban areas,
exacerbating the urban-rural divide and limiting rural economic growth.
3. Impacts of International Economic Integration
International economic integration has significantly influenced Vietnam’s labor market. First, trade agreements such as
the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam
Free Trade Agreement (EVFTA) have created job opportunities in high-value sectors like manufacturing, technology, and
finance.
Second, foreign direct investment (FDI) has strengthened Vietnam’s labor market. In 2023, FDI inflows reached $36.6
billion, with countries like Singapore, Japan, and South Korea contributing significantly. This has facilitated job creation
and wage growth, particularly in industrial zones like Bắc Ninh and Bình Dương.
Third, economic integration has highlighted disparities. While high-skilled workers benefit from wage increases and new
opportunities, unskilled labor faces stagnation. For example, average wages in urban manufacturing jobs are 1.5–2 times
higher than those in rural agriculture, contributing to income inequality.
4. Policy Implications for Labor Force Development
4.1 Addressing Skills Mismatches
To align education with industry demands, Vietnam must reform its vocational training and higher education systems.
Expanding partnerships with industries in high-growth sectors like AI, renewable energy, and IT can ensure that training
programs are relevant and market-driven. Additionally, introducing incentives for private sector involvement in skill
development can enhance workforce adaptability.
4.2 Promoting Formal Employment
Formalizing informal employment requires reducing bureaucratic barriers and providing tax incentives for small and
medium enterprises (SMEs) to register formally. Expanding social protection schemes to include informal workers will
improve job security and encourage transitions to formal employment.
4.3 Preparing for an Aging Workforce
Vietnam must invest in reskilling programs for older workers to extend their participation in the labor force.
Strengthening healthcare and pension systems will mitigate the economic strain of an aging population. Encouraging
flexible work arrangements for senior workers can also enhance their economic contributions.
4.4 Enhancing Regional Development
Promoting balanced development requires targeted investments in rural infrastructure and education. Establishing tech
hubs and agro-industrial clusters in less-developed regions can create high-quality jobs and reduce migration pressures
on urban centers.
4.5 Leveraging International Economic Integration
Vietnam should continue negotiating trade agreements that prioritize labor rights and skills development. Enhanced
labor standards will ensure that workers benefit from globalization while maintaining competitiveness in global markets.
Conclusion
Vietnam’s labor force is a cornerstone of its economic growth, but challenges such as skill mismatches, informal
employment, and an aging population threaten its long-term sustainability. International economic integration offers
immense opportunities for job creation and skill enhancement, but disparities in access and benefits need to be
addressed. By implementing reforms that focus on education, formalization, and balanced regional development,
Vietnam can unlock the full potential of its labor force and maintain its competitive edge in the global economy.

T7: FDI
Foreign Direct Investment (FDI) refers to investments made by a foreign entity to acquire a lasting interest or
management influence in an enterprise located in another country. FDI not only brings capital but also drives technology
transfer, skill development, and global integration. In Vietnam, FDI has played a pivotal role since the Đổi Mới reforms in
1986, transforming the nation into a key player in global manufacturing and trade. However, challenges such as limited
technology transfer and environmental concerns persist. This essay evaluates Vietnam’s FDI landscape with concrete
evidence, explores its contributions, and identifies challenges and actionable policy solutions.
1. Current Status of FDI in Vietnam
Vietnam remains a magnet for FDI due to its strategic location, competitive labor costs, and robust trade agreements.
First, FDI capital flows have shown resilience despite global disruptions. Vietnam attracted $36.61 billion in FDI in 2023,
recovering strongly from pandemic-era lows. Disbursed FDI in the first two months of 2024 reached $2.8 billion,
reflecting a 9.8% increase compared to 2023, and newly registered capital surged by 203.8% to $3.6 billion during the
same periods heavily concentrated in manufacturing, technology, and energy sectors. For example, Samsung has
invested over $18 billion in Vietnam, employing nearly 100,000 workers and contributing significantly to Vietnam’s status
as the second-largest exporter of smartphones globally . Similarly, Intel’s Ho Chi Minh City is its largest assembly and
testing facility, with an investment of $1.5 billion.
Third, FDI-related exports accounted for 74% of Vietnam's total export turnover in 2023, with electronics leading the
way. High-value export items such as smartphones and computers have solidified Vietnam’s integration into global value
chains .
2. Contributions omy
2.1 Capital and Economic Growth
FDI has been a critical source of external capital, enabling industrial development and infrastructure expansion. By 2023,
FDI enterprises contributed 25% of GDP, underscoring their role as economic drivers. For example, the industrial zones
in Bắc Ninh and Bình Dương have attracted substantial foreign investments, turning them into economic hubs.
2.2 Job Creation and Skill Development
FDI projects have created over 2.4 million direct and indirect jobs as of 2023. Workers at foreign-owned enterprises gain
exposure to international practices and technologies. For instance, Samsung’s factories provide comprehensive training
programs, equipping local employees with advanced technical skills.
2.3 Trade and Export Growth
FDI-related enterprises dominate Vietnam’s export sector, especially in electronics and textiles. In 2023, FDI-driven
exports amounted to over $281 billion, with key contributors including Samsung, LG, and Foxconn .
2.4 Technology Transfer
Though uneven, FDIated technological upgrades in manufacturing, agriculture, and telecommunications. Intel’s assembly
plant in Ho Chi Minh City employs AI-driven systems, enhancing productivity and setting a benchmark for local firms.
3. Challenges Associated with FDI
3.1 Limited Technology Transfer
Despite investments in high-tech industries, local firms often remain confined to low-value tasks. For instance,
Vietnamese companies in electronics primarily handle assembly, while core technologies are retained by foreign entities.
This restricts knowledge diffusion and innovation within the domestic market.
3.2 Environmental Degradation
FDI in heavy industries has caused severe environmental damage. The Formosa Ha Tinh Steel Corporation’s wastewater
discharge scandal in 2016 led to the destruction of marine ecosystems along 200 km of coastline, severely impacting the
livelihoods of coastal communities.
3.3 Transfer Pricing and Tax Evasion
Some multinational corporations manipulate transfer pricing to evade taxes. For example, Coca-Cola Vietnam faced
allegations of tax evasion worth $20.2 million, exposing weaknesses in regulatory oversight.
3.4 Workforce Skill Gaps
While FDI creates jobs, gaps in workforce readiness persist. Only 27.2% of workers in 2023 held vocational or technical
qualifications, limiting their ability to participate in high-value industries such as AI, robotics, or renewable energy.
4. Policy Recommendations for FDI Optimization
4.1 Enhance Technology Transfer
Vietnam should require foreign firms to establish joint ventures with local partners to ensure knowledge sharing. For
instance, South Korea’s approach to mandating local collaboration in high-tech industries could serve as a model.
Incentivizing foreign firms to invest in R&D centers in Vietnam can also accelerate innovation.
4.2 Strengthen Environmental Regulations
Stricter environmental standards must be enforced to mitigate damage from FDI projects. Offering tax breaks for green
investments, such as renewable energy and sustainable manufacturing, can attract eco-friendly investors while aligning
with Vietnam’s Net Zero 2050 commitments.
4.3 Improve Tax Governance
Vietnam must tighten regulations to detect and prevent transfer pricing abuses. Collaboration with international bodies
like the OECD can provide access to best practices in tax governance and transparency.
4.4 Invest in Human Capital
Expanding vocational training programs and aligning curricula with industry demands is crucial. For example, Samsung’s
partnership with vocational schools in Bắc Ninh provides a model for integrating industry needs into education.
Introducing national certification programs for high-demand skills, such as coding and automation, will further enhance
workforce readiness.
4.5 Promote Balanced Regional Development
Encouraging FDI in underdeveloped regions requires targeted incentives, such as tax holidays or subsidized land leases.
Developing infrastructure in these regions, including transportation and digital connectivity, will attract investment and
reduce urban-rural disparities.
Conclusion
FDI has been instrumental in Vietnam’s economic transformation, driving growth, job creation, and export expansion.
However, challenges such as limited technology transfer, environmental degradation, and workforce skill gaps must be
addressed to maximize its potential. By implementing policies that prioritize technology transfer, environmental
sustainability, and human capital development, Vietnam can sustain its position as a leading FDI destination while
ensuring inclusive and sustainable growth. With strategic reforms, FDI will continue to be a cornerstone of Vietnam’s
economic success.

T8: FOREIGN DIRECT INVESTMENT

Foreign Direct Investment (FDI) refers to investments made by a foreign entity to acquire a lasting interest or
management influence in an enterprise located in another country. FDI not only brings capital but also drives technology
transfer, skill development, and global integration. In Vietnam, FDI has played a pivotal role since the Đổi Mới reforms in
1986, transforming the nation into a key player in global manufacturing and trade. However, challenges such as limited
technology transfer and environmental concerns persist. This essay evaluates Vietnam’s FDI landscape with concrete
evidence, explores its contributions, and identifies challenges and actionable policy solutions.
1. Current Status of FDI in Vietnam
Vietnam remains a magnet for FDI due to its strategic location, competitive labor costs, and robust trade agreements.
First, FDI capital flows have shown resilience despite global disruptions. Vietnam attracted $36.61 billion in FDI in 2023,
recovering strongly from pandemic-era lows. Disbursed FDI in the first two months of 2024 reached $2.8 billion,
reflecting a 9.8% increase compared to 2023, and newly registered capital surged by 203.8% to $3.6 billion during the
same periods heavily concentrated in manufacturing, technology, and energy sectors. For example, Samsung has
invested over $18 billion in Vietnam, employing nearly 100,000 workers and contributing significantly to Vietnam’s status
as the second-largest exporter of smartphones globally . Similarly, Intel’s Ho Chi Minh City is its largest assembly and
testing facility, with an investment of $1.5 billion.
Third, FDI-related exports accounted for 74% of Vietnam's total export turnover in 2023, with electronics leading the
way. High-value export items such as smartphones and computers have solidified Vietnam’s integration into global value
chains .
2. Contributions omy
2.1 Capital and Economic Growth
FDI has been a critical source of external capital, enabling industrial development and infrastructure expansion. By 2023,
FDI enterprises contributed 25% of GDP, underscoring their role as economic drivers. For example, the industrial zones
in Bắc Ninh and Bình Dương have attracted substantial foreign investments, turning them into economic hubs.
2.2 Job Creation and Skill Development
FDI projects have created over 2.4 million direct and indirect jobs as of 2023. Workers at foreign-owned enterprises gain
exposure to international practices and technologies. For instance, Samsung’s factories provide comprehensive training
programs, equipping local employees with advanced technical skills.
2.3 Trade and Export Growth
FDI-related enterprises dominate Vietnam’s export sector, especially in electronics and textiles. In 2023, FDI-driven
exports amounted to over $281 billion, with key contributors including Samsung, LG, and Foxconn .
2.4 Technology Transfer
Though uneven, FDIated technological upgrades in manufacturing, agriculture, and telecommunications. Intel’s assembly
plant in Ho Chi Minh City employs AI-driven systems, enhancing productivity and setting a benchmark for local firms.
3. Challenges Associated with FDI
3.1 Limited Technology Transfer
Despite investments in high-tech industries, local firms often remain confined to low-value tasks. For instance,
Vietnamese companies in electronics primarily handle assembly, while core technologies are retained by foreign entities.
This restricts knowledge diffusion and innovation within the domestic market.
3.2 Environmental Degradation
FDI in heavy industries has caused severe environmental damage. The Formosa Ha Tinh Steel Corporation’s wastewater
discharge scandal in 2016 led to the destruction of marine ecosystems along 200 km of coastline, severely impacting the
livelihoods of coastal communities.
3.3 Transfer Pricing and Tax Evasion
Some multinational corporations manipulate transfer pricing to evade taxes. For example, Coca-Cola Vietnam faced
allegations of tax evasion worth $20.2 million, exposing weaknesses in regulatory oversight.
3.4 Workforce Skill Gaps
While FDI creates jobs, gaps in workforce readiness persist. Only 27.2% of workers in 2023 held vocational or technical
qualifications, limiting their ability to participate in high-value industries such as AI, robotics, or renewable energy.
4. Policy Recommendations for FDI Optimization
4.1 Enhance Technology Transfer
Vietnam should require foreign firms to establish joint ventures with local partners to ensure knowledge sharing. For
instance, South Korea’s approach to mandating local collaboration in high-tech industries could serve as a model.
Incentivizing foreign firms to invest in R&D centers in Vietnam can also accelerate innovation.
4.2 Strengthen Environmental Regulations
Stricter environmental standards must be enforced to mitigate damage from FDI projects. Offering tax breaks for green
investments, such as renewable energy and sustainable manufacturing, can attract eco-friendly investors while aligning
with Vietnam’s Net Zero 2050 commitments.
4.3 Improve Tax Governance
Vietnam must tighten regulations to detect and prevent transfer pricing abuses. Collaboration with international bodies
like the OECD can provide access to best practices in tax governance and transparency.
4.4 Invest in Human Capital
Expanding vocational training programs and aligning curricula with industry demands is crucial. For example, Samsung’s
partnership with vocational schools in Bắc Ninh provides a model for integrating industry needs into education.
Introducing national certification programs for high-demand skills, such as coding and automation, will further enhance
workforce readiness.
4.5 Promote Balanced Regional Development
Encouraging FDI in underdeveloped regions requires targeted incentives, such as tax holidays or subsidized land leases.
Developing infrastructure in these regions, including transportation and digital connectivity, will attract investment and
reduce urban-rural disparities.
Conclusion
FDI has been instrumental in Vietnam’s economic transformation, driving growth, job creation, and export expansion.
However, challenges such as limited technology transfer, environmental degradation, and workforce skill gaps must be
addressed to maximize its potential. By implementing policies that prioritize technology transfer, environmental
sustainability, and human capital development, Vietnam can sustain its position as a leading FDI destination while
ensuring inclusive and sustainable growth. With strategic reforms, FDI will continue to be a cornerstone of Vietnam’s
economic success.

T10: Outsourcing
Outsourcing is a business practice in which companies delegate tasks or services to third-party providers, often in other
countries, to cut costs and enhance operational efficiency. Vietnam has emerged as a significant player in the global
outsourcing market, driven by its young workforce, competitive labor costs, and strategic location. This essay explores
the impacts of outsourcing on Vietnam’s economy, highlights the challenges, and provides recommendations for
sustainable development in this sector.
1. Impacts of Outsourcing on Vietnam
1.1 Economic Growth
Outsourcing has been a substantial contributor to Vietnam’s GDP growth. In 2022, the economy expanded by 8.02%, with
sectors like textiles, electronics, and IT outsourcing playing pivotal roles. For example, the textile and garment industry, a
key outsourcing sector, accounted for over $40 billion in exports in 2023, making Vietnam the third-largest exporter
globally. Similarly, outsourcing in electronics manufacturing, led by companies like Samsung and Foxconn, has turned
Vietnam into a critical node in global supply chains.
1.2 Job Creation
Outsourcing has created millions of jobs, particularly in labor-intensive industries. The garment and textile industry alone
employs approximately 2.8 million workers. Urbanization has accelerated as workers migrate from rural areas to cities
like Hồ Chí Minh City and Hải Phòng, where outsourcing hubs are concentrated. This migration has fueled urban
economic growth but also introduced challenges like overcrowding.
1.3 Foreign Direct Investment (FDI)
Vietnam’s outsourcing-friendly policies have attracted substantial FDI, with inflows reaching approximately $20 billion in
2022. Companies from Japan, South Korea, and the United States invest heavily in Vietnam’s manufacturing and IT
sectors. For instance, Samsung accounted for nearly 20% of Vietnam’s total exports in 2023, highlighting its importance
in the outsourcing ecosystem.
1.4 Infrastructure Development
The outsourcing boom has spurred infrastructure investments, including roads, ports, and telecommunications
networks. Industrial zones like Bắc Ninh and Bình Dương have become outsourcing hubs, equipped with advanced
facilities to attract multinational corporations.
1.5 Global Recognition
Vietnam is now recognized as a leading outsourcing destination in Asia, alongside India and the Philippines. Ranking 7th
in the 2023 Global Services Location Index, Vietnam’s cost competitiveness and skilled workforce have made it a
preferred choice for IT outsourcing and business process outsourcing (BPO).
2. Challenges of Outsourcing in Vietnam
2.1 Economic Dependence
Vietnam’s reliance on multinational corporations for exports and employment makes it vulnerable to global economic
fluctuations. For instance, Samsung’s operations contributed 20% of Vietnam’s exports in 2023, indicating a
concentration risk. The COVID-19 pandemic highlighted these vulnerabilities when major companies temporarily halted
production.
2.2 Environmental Issues
Lenient environmental regulations have led to pollution and resource depletion. The Formosa Ha Tinh disaster in 2016,
which caused massive ecological damage across four provinces, is a stark example. In 2022, 70% of untreated industrial
wastewater was discharged into the environment, according to the Ministry of Natural Resources and Environment.
2.3 Skill Limitations
Outsourcing jobs in Vietnam often require low skills, limiting opportunities for career advancement. In the electronics
sector, over 70% of workers perform basic assembly tasks, while only 10% receive in-depth training. This restricts local
innovation and technological advancement.
2.4 Job Insecurity
Outsourced jobs are frequently temporary, leaving workers vulnerable during economic downturns. In 2023, declining
export demand led to mass layoffs in the textile and footwear industries, with companies like PouYuen reducing their
workforce significantly.
3. Policy Recommendations for Sustainable Outsourcing
3.1 Human Resource Development
 ● Enhance Vocational Training: Strengthen skill development programs for high-demand sectors like IT,
industrial manufacturing, and financial services.
● Promote STEM Education: Invest in science, technology, engineering, and mathematics to prepare a workforce
for high-value industries.
● Collaborate with Multinational Corporations: Partner with global firms to implement advanced training and
technology transfer programs.
3.2 Strengthen Environmental Regulations
● Enforce Strict Standards: Mandate proper waste management and pollution control measures for foreign
companies.
● Promote Green Practices: Provide tax incentives to companies adopting environmentally friendly production
methods.
● Monitor and Penalize Violators: Establish specialized agencies to oversee compliance and impose penalties for
breaches.
3.3 Diversify the Economy
● Reduce Dependency on Multinationals: Encourage the growth of domestic firms through financial support and
capacity-building programs.
● Expand into High-Tech Sectors: Attract investments in software development, artificial intelligence, and
technology manufacturing to reduce reliance on labor-intensive industries.
3.4 Upgrade Infrastructure
● Modernize Logistics Networks: Invest in transportation and storage infrastructure to improve supply chain
efficiency.
● Expand Telecommunications: Develop data centers and expand 5G coverage to attract digital service
industries.
● Adopt Renewable Energy: Integrate green technology into infrastructure projects to ensure sustainable
growth.
3.5 Foster Innovation
● Support R&D: Provide incentives for companies investing in research and development, particularly in
high-tech industries.
● Build Innovation Ecosystems: Develop innovation hubs and tech parks to foster collaboration between
domestic and foreign enterprises.
● Protect Intellectual Property: Strengthen enforcement of intellectual property laws to reassure investors and
encourage innovation.
Conclusion
Outsourcing has significantly boosted Vietnam’s economy, driving GDP growth, job creation, and FDI inflows. However,
challenges like environmental degradation, economic dependence, and skill gaps must be addressed to ensure
sustainable development. By investing in human capital, enforcing environmental standards, and promoting
diversification and innovation, Vietnam can maximize the benefits of outsourcing while minimizing its risks. With these
strategies, Vietnam can solidify its position as a global outsourcing leader and achieve long-term economic resilience.

T9: International trade

International trade is the exchange of goods, services, and capital across borders, which fosters economic growth and
enhances global competitiveness. For Vietnam, trade has been a crucial engine of economic development, transforming
it into a global manufacturing hub and a key player in regional and global supply chains. In 2023, Vietnam’s total trade
turnover reached $731 billion, with exports accounting for 89% of GDP. This robust integration into the global market has
created jobs, improved foreign exchange reserves, and introduced new technologies. However, challenges such as
over-reliance on key markets, trade imbalances, and environmental concerns highlight the need for strategic policy
interventions. This essay explores Vietnam’s trade contributions in detail, addresses its challenges, and provides
actionable recommendations.

Vietnam has actively participated in several free trade agreements (FTAs) to enhance global market access and boost
exports. Key agreements include the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific
Partnership), which covers 11 member countries and contributed to a 30% growth in Vietnam’s exports to these markets
by 2023. The EVFTA (EU-Vietnam Free Trade Agreement), effective since 2020, has eliminated 99% of tariffs between
Vietnam and the EU, driving exports to the EU to reach $50.4 billion in 2023, with significant contributions from textiles
and seafood. Additionally, the RCEP (Regional Comprehensive Economic Partnership), the world’s largest FTA involving
ASEAN and key trading partners, accounted for 70% of Vietnam’s total trade turnover in 2023. These agreements not
only diversify export markets and attract FDI but also position Vietnam as a competitive player in global trade.

1. Contributions of International Trade to Vietnam’s Economy

1.1 Economic Growth
International trade has been instrumental in Vietnam’s rapid economic growth. First, exports reached $371 billion in
2023, with electronics, textiles, and agriculture as key contributors. Electronics, led by companies like Samsung and LG,
made up over 40% of total exports, reflecting Vietnam’s role in the global tech supply chain.
Second, trade-driven industries have significantly boosted GDP. For example, export-oriented manufacturing
contributed 25% of GDP in 2023, a sharp rise from 16% in 2010, showcasing Vietnam’s growing importance in global value
chains.
1.2 Job Creation
Trade has created millions of jobs across various sectors. First, the textile and garment industry, a cornerstone of
Vietnam’s exports, employs over 2.8 million workers, many of whom are women, thereby promoting gender equality in
employment. Second, the seafood sector employs 4.5 million people, particularly in rural coastal areas, supporting
livelihoods and reducing poverty.
1.3 Foreign Exchange and Trade Surplus
Vietnam’s trade performance has bolstered its foreign exchange reserves. In 2023, Vietnam recorded a trade surplus of
$11 billion, a critical buffer for macroeconomic stability. Export-driven industries generate substantial foreign exchange
earnings, which are vital for financing imports of machinery and technology.
1.4 Technology and Knowledge Transfer
Through integration into global trade, Vietnam has gained access to advanced technologies and international
management practices. For instance, multinational corporations such as Intel and Samsung have integrated Vietnamese
firms into their supply chains, fostering technological upgrades and skills development.
1.5 Expansion of Market Access
Vietnam’s participation in trade agreements like the CPTPP and EVFTA has expanded its market access to over 230
countries and territories. These agreements reduce tariffs, enhance export competitiveness, and position Vietnam as a
preferred trade partner in regions like the EU, where exports grew by 14% in 2023.
2. Challenges in International Trade
2.1 Trade Imbalances
Despite strong exports, Vietnam relies heavily on imports of machinery, raw materials, and intermediate goods, resulting
in trade imbalances. In 2023, imports totaled $360 billion, with essential components for electronics and textiles
dominating the import basket. This dependency makes Vietnam vulnerable to global supply chain disruptions.
2.2 Over-Reliance on Key Markets
Vietnam’s trade concentration in a few markets increases its economic vulnerability. For instance, the U.S. accounted for
29% of Vietnam’s total exports in 2023, making the economy susceptible to shifts in U.S. demand or trade policies.
Similarly, 33% of Vietnam’s imports come from China, indicating dependency for raw materials.
2.3 Environmental Impacts
Export-driven industries, particularly textiles and aquaculture, contribute to significant environmental degradation. The
textile industry, for example, uses massive amounts of water and releases untreated wastewater, threatening
ecosystems. Coastal aquaculture practices have also led to the destruction of mangroves, further exposing Vietnam to
climate change risks.
2.4 Low Value Addition
While Vietnam is a leading exporter of goods, much of its trade involves low-value assembly tasks. For instance, over 70%
of workers in the electronics sector are engaged in basic assembly, with core components and technologies imported
from other countries. This limits the value retained within the domestic economy.
2.5 Barriers to Trade
Non-tariff barriers, such as stringent safety standards and sustainability requirements from the EU and the U.S.,
challenge Vietnamese exporters. For example, Vietnamese seafood exports face restrictions due to concerns over
hygiene and sustainability certifications, reducing access to lucrative markets.
3. Policy Recommendations for Sustainable Trade Development
3.1 Diversify Export Markets
Vietnam must reduce reliance on a few key markets by exploring emerging markets in Africa, Latin America, and South
Asia. Strengthening intra-ASEAN trade can also mitigate risks associated with dependency on the U.S. and China.
3.2 Promote Value Addition
To retain more value domestically, Vietnam should invest in high-value sectors. First, shifting from garment
manufacturing to fashion design or branding can increase profit margins. Second, developing domestic capabilities for
semiconductor production can reduce reliance on imported components in electronics.
3.3 Enhance Environmental Sustainability
Vietnam must enforce stricter environmental regulations to address industrial pollution. Providing tax incentives for
green technologies, such as eco-friendly dyeing in textiles or sustainable aquaculture practices, can help industries
comply with international standards.
3.4 Invest in Workforce Skills
To meet the demands of high-value industries, Vietnam should enhance vocational training and STEM education.
Collaborating with multinational corporations to design industry-specific training programs can ensure workforce
readiness for advanced manufacturing and technology-driven industries.
3.5 Improve Trade Logistics
Investments in logistics infrastructure, such as ports, highways, and digital customs systems, can reduce costs and
increase efficiency. Expanding the digitalization of customs procedures will enable faster trade processing and improve
competitiveness.
3.6 Strengthen Trade Policies
Vietnam should actively address non-tariff barriers by improving product standards and sustainability certifications.
Establishing a centralized support system for exporters to navigate complex international regulations can boost
compliance and market access.
Conclusion
International trade has been a cornerstone of Vietnam’s economic transformation, driving growth, job creation, and
market expansion. However, challenges such as trade imbalances, environmental issues, and reliance on key markets
highlight the need for strategic policy interventions. By diversifying markets, moving up the value chain, and investing in
sustainable practices, Vietnam can ensure that its trade sector continues to be a driver of inclusive and resilient
economic growth. With proactive reforms, Vietnam can solidify its position as a competitive and sustainable player in the
global trade arena.