Vietnam’s competitiveness is moving up as the country moves from a heavily resource-based economy to an efficiency-driven one.
According to Nikkei Asian Review, the Global Competitiveness Report 2017-2018 was released last Wednesday, providing insights on how world economies have performed in the past year.
Compiled by the World Economic Forum, the research ranks countries based on 114 different indicators, grouped into 12 main pillars that capture “concepts that matter for productivity and long-term prosperity.”
Vietnam’s economy has made great strides in recent years in terms of competiveness: moving up five spots from last year – and 20 from five years ago – to 55th place.
The Southeast Asian country has made significant improvements in technological readiness and labor market efficiency, the report notes. The jump can largely be attributed to Vietnam’s robust commercial trade as the nation ranks 7th in ratio of imports to gross domestic products and 11th in ratio of exports.
The dissolution of the much-anticipated TPP may have curtailed Vietnam’s trade potential, but the report suggests that "the country's growth is nonetheless projected to remain robust from strong exports."
The Global Competitiveness Report also puts Vietnam among 17 economies that are transitioning from a factor-driven economy to one that’s more efficiency-driven. The latter mostly makes use of factor endowments such as unskilled labor and natural resources. Examples include Cambodia and most of the African continent.
As countries begin to move towards efficiency, they start to “develop more efficient production processes and increase product quality because wages have risen and they cannot increase prices.”
Switzerland, the US and Singapore top the list while other regional neighbors such as Malaysia, China and Thailand also performed well at 23rd, 27th and 32nd places, respectively.
The reports' 12 main pillars are institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
[Photo via VietnamNet]
