Vietnam's export-led growthstrategy and global integration are among the key factorsbehind thecountry's remarkable achievements in growthand poverty reduction over the last two and a halfdecades.During this period, Vietnam's per capita incomeincreased nearly fourfold and povertywas reduced from around53 percent in 1992 to 2 percent in 2016. Vietnam has becomeone of themost open economies in the world with atrade-to-GDP ratio of 187.52 percent in 2018.Merchandiseexport growth averaged more than 15 percent perannum in the last ten years; nearly five times theglobalexport growth. The country's export basket has improvedin its technological content and hasdiversified in both itsgeographic destination and its product mix. There arenevertheless challenges that continue to confront Vietnam’sexport performance. Many of Vietnam's manufacturingexports have low domestic value addition, where Vietnamperforms primarily assembly functions. Trade costs remainhigh compared to the average regional level. Domesticfirms' participation in key global value chains (GVCs)is limited, and instead, export performance is largelydriven by the foreign direct investment (FDI) sector,accounting for more than 70 percent of total exports.Vietnam will likely be able to maintain its high exportperformance even if these challenges are not addressed, butthere is scope for Vietnam to benefit even more from trade.
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