From Quiet Rise to Roar: Can Vietnam Become the Next Asian Tiger?

The Four Asian Tigers—Taiwan, Hong Kong, South Korea, and Singapore—are economies that have experienced high levels of economic growth since the 1960s. Marked by a GDP growth rate of over seven per cent from the 1960s to 1990s, each sought to target foreign markets and exploit their comparative advantages after rapidly industrializing with an emphasis on the exportation of specialized manufactured goods. The Four Asian Tigers became a model for other countries in the developing world by demonstrating the economic impact of export-oriented industrialization combined with active state guidance of industrial development and the prioritization of education. Such economic success stories have been especially impactful for other growing economies in Southeast Asia, dubbed the ‘Asian Tiger Cubs’. Vietnam, in particular, has been especially vocal in its aspirations for continued economic development. 

In late 2024, Communist Party chief Tô Lâm declared the arrival of “a new era of development,” representing Vietnam’s goal of becoming the next Asian Tiger by 2045. In the 50 years following the Vietnam War, the country transformed from a poor, war-torn, sanctioned, and isolated country into one of the fastest-developing countries in the world. Even amidst a climate crisis, an aging population, rampant corruption, and aggressive US tariffs, Vietnam’s Prime Minister, Phạm Minh Chính, promises to maintain an eight per cent economic growth rate. Despite structural challenges, Vietnam’s current economic strategy has indeed garnered impressive growth and positioned itself as a serious candidate for Asian Tiger status. 

To understand how Vietnam reached this point, it is essential to understand Vietnam’s unique socialist-capitalist model and how it came to be. After the Fall of Saigon in 1975 and the nation’s subsequent reunification, Vietnam embarked on a journey of socialist reforms, prioritizing economic transformation. However, the implementation of the second and third Five-Year plans from 1976 to 1985 had an adverse effect on the economy due to the nature of the development strategy—based on a bureaucratic, centrally planned mechanism that relied solely on the state-owned and collective sectors and with no room for private economic development. Hyperinflation soared to 700 per cent, and seven million people became undernourished. Previously reliant on Soviet aid, the Soviet Union’s decline in the 1970s and economic collapse in the 1980s forced Vietnam’s hand. 

In 1986, Vietnam initiated the Đổi Mới reforms, marking the beginning of Vietnam’s “socialist-oriented market economy.” In its early stages, the Đổi Mới reforms were focused on the removal of self-imposed barriers to progress and the utilization of various market-oriented measures. This included the liberalization of the domestic market, the encouragement of foreign direct investment (FDI) and the private sector, and the reduction of subsidies to state-owned enterprises (SOEs). Vietnam maintained a high economic growth rate in the 20 years following the introduction of Dổi Mới, recording an average annual economic growth of six per cent over that period—one of the highest recorded rates among developing countries. Vietnam also normalized diplomatic relations with China in 1991 and reestablished diplomatic ties with the US in 1995.

Vietnam’s current development model has two aspects. A key feature of the socialist-oriented market economy is state ownership and control: private enterprise is encouraged under the condition that the state retains ownership and control over key industries, to safeguard national interests and objectives. The economy also promotes competition across many sectors in order to enhance productivity, innovation, and efficiency gains. Economic policies are implemented with the intent of serving the public good, with wealth being reinvested into social services and infrastructure. The state plays a crucial role in Vietnam’s economic policy, implementing five-year plans to center social development goals. Additionally, the government implements various social welfare programs in order to support all layers of the population. In a more capitalist approach, Vietnam encourages private-sector growth, with systems in place to support small and midsize enterprises (SMEs) and promote entrepreneurship. The state also provides incentives, such as tax breaks, in sectors that align with national development goals for FDIs. The government encourages public-private partnerships (PPPs) to employ private-sector resources and expertise in order to support public services and infrastructure projects, thus enhancing efficiency and innovation. 

The second aspect of Vietnam’s development model is diplomatic: a flexible bamboo diplomacy (ngoại giao cây tre) that balances relations with both China and the US. Rooted in the diplomatic thought of Hồ Chí Minh, bamboo diplomacy is inspired by the image of bamboo—with strong roots, a sturdy trunk, and adaptable branches. It emphasizes national sovereignty and practical neutrality, while still diversifying and multilateralizing Vietnam’s foreign relations. Vietnam actively engages with international organizations, promoting economic cooperation, as well as establishing bilateral agreements with numerous countries, such as the United States and China. Through participation in the Association of Southeast Asian Nations (ASEAN), Vietnam promotes regional stability and upholds its stance of non-alignment, independence, and adherence to international law amidst great power competition. Despite historical tensions, the ongoing conflict in the South China Sea, and the Trump Administration’s aggressive tariffs, Vietnam has nonetheless managed to create these comprehensive strategic partnerships with both powerhouses.

The success of Vietnam’s hybrid model is proven with statistical evidence. Since 1990, the poverty rate has dropped sharply, lifting 40 million people out of poverty, with extreme poverty almost being eliminated in 2020. Vietnam’s Human Development Index (HDI) rose nearly 50 per cent from 1990 to 2022, bringing it into the United Nations Development Programme’s “high human development” category. Life expectancy has increased from 63 years in 1990 to 75 years in recent times, while infant and maternal mortality rates have declined. Access to health care, education and higher education, literacy, and literacy rates have all increased.

In the third quarter of 2025, despite rising global trade protectionism, Vietnam’s GDP expanded by over 8 per cent year-on-year. This growth rate puts Vietnam squarely within the seven to ten per cent growth range once achieved by the original Asian Tigers during their peak industrialization year. 

So what remains a challenge to Vietnam’s exploding economic growth? There are a couple of factors: the first is an aging population. Vietnam’s abundant workforce helped contribute to the country’s economic growth over the past decade. However, Vietnam is currently transitioning from a “golden population structure” period toward an aged society, and is experiencing a decline in fertility rates. Viable solutions to this issue include encouraging earlier marriage and children, and providing social benefits for working mothers and younger couples, as well as better child care. Additionally, in order to fully utilize the current workforce, resources for education and training from the government are considered necessary. 

Another issue is the climate crisis: increased typhoons and rising sea levels cause agricultural losses and damage infrastructure, decreasing labour productivity and increasing poverty. The climate crisis could cost Vietnam 12 per cent to 14.5 per cent of GDP by 2050. Potential solutions include decreasing emissions and adapting infrastructure to the changing climate.

Another challenge is corruption within the Vietnamese government. Corruption often appears as bribery and embezzlement across all levels of government, dissuading foreign investment, exacerbating social inequalities and the wealth gap, and distorting market mechanisms. Vietnam’s government has begun efforts to curb corruption, as well as the formation of grassroots campaigns and civil society movements to mobilize citizens.

And finally, current geopolitics, more specifically the recent US-China trade war, presents an obstacle for Vietnam’s economic growth. Presently, the 20 per cent tariffs raise the prices of Vietnamese products in America, significantly impacting the export-driven economy in sectors such as textiles, footwear, steel and aluminum, and furniture, which can lead to strained profit margins, reduced order volumes, and job losses. If Trump’s tariff on Vietnamese goods causes a 10 per cent drop in the country’s shipments to the US, GDP growth could be cut by 0.84 percentage points. In the long run, Trump’s tariffs could act as a catalyst for further diversifying the Vietnamese economy and moving away from an export-driven model into high-tech sectors like computer chips, artificial intelligence, and renewable energy. 

Vietnam’s trajectory shows that a socialist-oriented market economy combined with flexible bamboo diplomacy can preserve national sovereignty while delivering growth rates and human development gains comparable to those of the original Asian Tigers. Vietnam’s path towards achieving Asian Tiger status will depend on whether it can confront structural challenges—such as aging demographics, climate crises, rampant corruption, and geopolitical conflicts—without losing momentum. If Vietnam can utilize its hybrid model to deepen reforms, move into higher-value sectors, and sustain diplomatic balance amid unpredictable politics, it is well positioned not only to become the next Asian Tiger but to redefine what an Asian Tiger looks like in the 21st century.

Edited By Georgia Massis

Featured image: “Panorama of Ho Chi Minh City in 2019″ by Lê Minh Phát is licensed under Creative Commons.