How to turn success into real growth

Over the past 40 years, Vietnam has emerged as one of the biggest economic success stories.

- By Jola Pasku

By Jola Pasku Senior economist S&P Global Market Intelligence

As it leverages its integration in global value chains to support its long-term growth ambitions, overcoming lingering constraints remains key to future success.

Vietnam’s strong manufacturing fundamentals including a favourable geographical location in close proximity to China, access to key advanced markets through free trade deals, and a young and inexpensive labour force have supported an export-oriented manufacturing investment boom that has continued unabated even when global trade tensions reached new highs in 2025.

Vietnam’s growing role as an export-oriented manufacturing hub provides an opportunity to attract foreign investment in new growth areas and develop new capabilities to move up the technological ladder. Yet, the extent to which such gains will be materialised depends on whether structural constraints can be addressed.

Although Vietnam has successfully achieved high growth over the past decade, much of its success can be attributed to foreign-invested enterprises (FIEs). However, FIEs are not well integrated into the domestic economy, resulting in a dual economy with the value-added share of the domestic sector in overall exports limited at approximately 27 per cent. This disconnect prevents technological transfer and productivity spillovers to local firms and acts as a drag on overall productivity.