In a protectionist era, Vietnam is also a trend-bending, Communist champion of open borders, a signatory to more than a dozen free trade agreements — including a landmark deal recently signed with the European Union.
Can Vietnam continue its success, despite potential obstacles such as shrinking populations, declining trade and an autocratic government’s tenacious grip on power? Probably. While its own working age population growth is slowing, most Vietnamese still live in the countryside, so the economy can continue to grow by shifting workers from rural areas to urban factory jobs. Over the last five years, no large country has increased its share of global exports more than Vietnam has.
And so far, its government has not made the kind of egregious policy mistake that typically retards economic development in autocratic nations. It is making autocratic capitalism work unusually well, through open economic policies and sound financial management.
The overwhelming majority of postwar economies that grew super fast, or went bust, were run by authoritarian governments. Vietnam has sustained strong growth so far, largely free of the classic excesses, like large government deficits or public debts.
One possible problem: After multiple rounds of privatization, the government owns many fewer companies, but those it still owns are huge and account for nearly a third of economic output — same as a decade ago. If trouble comes, these bloated state companies, which account for many of the bad loans in the banking system, are one place it could start.
It’s worth noting that rising debts also led to financial crises that marked the end of sustained growth in Japan, South Korea and Taiwan, and now hang over China as well. So there are perils on any development path. For now, Vietnam looks like a miracle from a bygone era, exporting its way to prosperity.
Ruchir Sharma is the chief global strategist at Morgan Stanley Investment Management, the author, most recently, of “The Ten Rules of Successful Nations” and a contributing opinion writer. This essay reflects his opinions alone.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: firstname.lastname@example.org.