Economic Development the Country I

Economic Development

The country I have selected is Vietnam. Vietnam is a rapidly developing country, but still predominantly underdeveloped, with a GDP per capita of just $2,800. The global economic crisis is expected to reduce Vietnam's GDP by 4-5% this year, as the country is highly dependent on exports. The economy is still largely dependent on light industry, which accounts for 42.7% of GDP. Services account for 38.4% and agriculture 19%.

Vietnam operates as a mixed economy. Still under Communist rule, Vietnam suffered decades of stagnant growth due to war and then a rigid command economy. Once financial support from the Eastern Bloc dried up, Vietnam's economy struggled. Finally in 2001, they followed China's lead in opening up their economy. The company joined ASEAN, signed a trade agreement with the United States. The result has been a significant boom throughout the 2000s. The government still controls large portions of the economy, but the free market is making significant inroads.

Of the four wheels, Vietnam is especially strong with respect to labor. The country is densely packed, with a population of 86 million people. The population growth rate is nearly 1%, and approximately 1.5 million enter the labor force each year, due to past high birth rates. It should be noted, however, that most of the labor force is still engaged in agriculture, which contributes the least to the economy. Thus, much of Vietnam's labor force is underutilized, representing an opportunity.

Since the Vietnamese economy was opened, capital has become more accessible. As of January 2008 there was $149 billion in investment capital in Vietnam. The largest sources of investment capital are in order Taiwan ($19.65 billion); Malaysia ($17.783 billion), Japan ($17.158 billion); South Korea ($16.256 billion) and Singapore ($15.438) (VVG, 2008). Capital stock in Vietnam has increased manifold in the past decade, and has fuelled the country's strong economic growth.

Vietnam does not have extensive natural resources. Most of the country is heavily farmed. The country is self-sufficient in oil, gas and hydroelectricity however, which is a benefit. Crude oil is a major export commodity. Much of the other export commodities are farm-based (coffee, tea, rubber, rice).

Vietnam's technology and innovation is nascent. Telecommunications infrastructure is improving. Cell phone and Internet usage is rapidly growing. However, the country is a follower in terms of technological innovation. The education system does not support strong innovation. Development in other areas, such as pharmaceutical or manufacturing, is slow.

Vietnam's government can take several steps to address the deficiencies among the four wheels. They can improve technology and innovation in a couple of ways. One is to invest more in infrastructure. Another is to invest in education so that Vietnamese can develop skills in technology disciplines.

The government can do little about the natural resources. They are well set in terms of energy, and should take steps to protect that. If they developed the oil and gas sector they could be open for exploitation. It is recommended that they protect their energy security.