Pixels of Progress: A granular look at Vietnam’s development journey

Weekly Business Insights from Top Ten Business Magazines

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since 2017 | Week 364 |  August 30-September 5, 2024

Pixels of Progress: A granular look at Vietnam’s development journey

By Bruce Delteil et al., | McKinsey & Company | August 22, 2024

Extractive Summary of the Article | Listen

A country level perspective of Vietnam can provide a good, general overview of what is taking place in the country—just imagine what a pixelated breakdown 230 times more granular could reveal. Such a granular deep dive is now available with a new dataset, Pixels of Progress, compiled by the McKinsey Global Institute (MGI). This specialized dataset provides a close-up view of human progress in Vietnam by breaking the country down into approximately 710 microregions.

Vietnam’s economic progress in the 21st century has been clear: GDP per capita grew by approximately 7 percent annually over 20 years, from $3,691 in 2000 to $10,252 in 2019 (PPP, 2017, constant international dollars). Vietnam’s integration with global supply chains, which enabled growing and more sophisticated exports, contributed to this transformational growth. In 2000, Vietnam’s main exports were crude oil and textiles, at close to $4 billion each. By 2019, electronics had become the main export with $100 billion in annual value.  Simultaneously, the Vietnamese average life expectancy has risen moderately to 74 years in 2019 from around 72.5 years in 2000.

A granular look at successful microregions in Vietnam revealed that, beyond mere numbers, the underlying reasons for their respective development varied. The following four regional examples illustrate the different indicators, showing economic progress related to specific sectors, such as agriculture, industry, services, and tourism.

Muong Te, in Lai Châu Province, shows an overall improvement in quality of life. Average life expectancy in Lai Châu, along with similar provinces in the mountainous and highland regions, was among the country’s lowest in 2000 but leapt the most from 2000 to 2019, mainly due to changes to food security and better access to healthcare.  Food security improved in Muong Te District, most likely as a result of a focus on producing high-yield crop varieties from modernized agriculture techniques. Healthcare workers were trained or retrained through, for instance, a ten-year project between the government and an NGO, Church World Services, that focused on healthcare and education from 2006 to 2017 in Muong Te.  In addition, investments were made to upgrade medical facilities at district level.

Viet Yen District in Bac Giang Province experienced a significant change in its GDP per capita as a result a nearly threefold increase between 2000 and 2019. While the area once mainly consisted of agrarian crops such as rice paddies, Viet Yen has now emerged as an economic hub of Bac Giang.  This change was likely boosted by changes to the industrialization of the area by means of large-scale projects (projects with total registered capital of above $100 million).   Bac Giang Province’s government instituted various policies that included focusing on removing challenges for investors and developers.

District 2 in Ho Chi Minh City (now Thu Duc City)—the microregion with the highest GDP per capita in Vietnam by 2019—wasn’t always the city it is today. Once a rural district with coconut groves and rice paddies, District 2 is now home to a new central business district, Thu Thiem, Thao Dien, and a large portion of the city’s expatriate community, all of which help form a thriving business precinct in Ho Chi Minh City.

Phan Thiet: From fishing villages to tourist hubs.  Despite having pristine beaches and favorable conditions for watersports, Phan Thiet—a coastal town in Binh Thuan Province—was a relatively unknown destination in 2000. However, between 2000 and 2005, infrastructure for tourism was developed that enabled economic growth for the province.  As a result, the number of visitors to Phan Thiet grew 12-fold between 2000 and 2019, increasing from 513,000 tourists in 2000 to 6.4 million in 2019.

3 key takeaways from the article

1. A country level perspective of Vietnam can provide a good, general overview of what is taking place in the country.  A more granular (breaking the country down into approximately 710 microregions.), pixelated view indicates that even faster progress has been made by some microregions across Vietnam. At the same time, it exposes microregions that are still behind national averages and highlights examples within Vietnam that could help shape a path for local economic development.  
2. The diversity of growth opportunities is highlighted by the district case studies: improved agriculture practices yielding increased output from regions such as the Mekong Delta; productive industrial hubs around major cities; a growing services and technology sector in Ho Chi Minh City; and emerging tourism in coastal areas. 
3. These microregions represent Vietnam’s potential ability to prosper in diverse economic spheres in the future. The increasing diversity is reflected in Vietnam’s economic complexity index: between 2000 and 2021, the country leapt from 93rd position globally to 61st.

Full Article

(Copyright lies with the publisher)

Topics:  Economy, Vietnam, Economic Development, Life Expectancy, Tourism, Industrialization