Vietnam after Two Years of WTO Accession: What Lessons Can Be Learnt?

This paper provides an overview of the socio-economic changes in Vietnam since its WTO accession in early 2007. This is critical since ex ante studies have all seemed to significantly underestimate the impacts of WTO accession and integration on Vietnam's economy, whilst failing to rigorously analyse foreign capital inflows and related macroeconomic issues. The years 2007-2008 witnessed remarkable improvements in Vietnam's economic performance, from real aspects to social issues and economic institutions. However, quality of growth remained modest, trade deficit widened, inflation surged, while Vietnam's vulnerability to negative external shocks gets increasingly apparent. The paper then draws out several major lessons for Vietnam from its first two years of WTO membership. Areas for further improvements, such as resolutions of bottlenecks to strengthening competitiveness, sustaining development, and building managerial capacity to mitigate macroeconomic and social risks, are also identified.