Image Credit: Heritage Foundation
Vietnam continues to gain economic freedom, as confirmed by the latest edition of the Heritage Foundation’s Index of Economic Freedom ranking.
The Index ranks a total of 176 countries based on how economically free or unfree they are. The comprehensive rating is based on twelve categories of freedoms. The Index divides countries into five groups, the best of which is “free” (and includes Singapore, Switzerland, Ireland, and Taiwan); the worst is “repressed” (with countries like Venezuela, Cuba, and North Korea).
Vietnam’s economic freedom score is 61.8, making its economy the 72nd freest in the 2023 Index. Its score is 1.2 points better than last year. Vietnam ranks 14th out of 39 countries in the Asia–Pacific region, and its overall score is above the world and regional averages.
What is most important, however, is not just the most recent score, but the change in the ranking over time: no country of comparable size in the whole world has gained as much economic freedom as Vietnam since 1995. Back in 1995, when the Index was first compiled, Vietnam scored a meager 41.7 points. In the intervening years, Vietnam has gained 20 points. By comparison, China had 52 points in 1995 and has gone on to lose almost four points since then. With a score of 48.3 points, China is now only 154th out of 176, a full 82 places behind Vietnam.
The US only just scrapes into the second-best of the five categories (“mostly free”, rank 25). There are now 16 countries in Europe alone that are economically freer than the US. If the United States were to lose just one more point in next year’s ranking, it would find itself in the “moderately free” category. The US has progressively dropped down the rankings in recent years.
The Heritage Foundation writes about Vietnam: “Capitalizing on its gradual integration into the global trade and investment system, the economy is becoming more market-oriented. Reforms have included partial privatization of state-owned enterprises, liberalization of the trade regime, and increasing recognition of private property rights.”
Vietnam secures strong ratings in the areas of “Fiscal Health” and “Government Spending,” and moderate ratings for “Business Freedom” and “Monetary Freedom.” Vietnam rates poorly for “Government Integrity,” “Judicial Effectiveness,” “Property Rights” and “Investment Freedom.”
If Vietnam continues on the path it embarked on in 1986 with the Doi Moi reforms, it has a good chance of becoming one of the world’s economically strongest countries. Before the economic reforms began, every bad harvest led to hunger, and Vietnam relied on support from the UN’s World Food Program and financial assistance from the Soviet Union and other Eastern Bloc countries. As late as 1993, 79.7 percent of the Vietnamese population was living in poverty. By 2006, the rate had fallen to 50.6 percent. In 2020, it was only five percent.
Vietnam is now one of the world’s most dynamic countries, with a vibrant economy that creates great opportunities for hardworking people and entrepreneurs. From a country that, before the market reforms began, was unable to produce enough rice to feed its own population, it has become one of the world’s largest rice exporters—and a major electronics exporter.
If it is to become one of the economically strongest countries in the world, Vietnam needs to make sure that its people do not forget why it has been so successful: increasing recognition of private property rights, more economic freedom, and greater integration into the global trading system.
Many countries today are doing the exact opposite and restricting economic freedom; Vietnam should aspire to gain ever more economic freedom.
The post The Country Where Economic Freedom Has Grown the Most Over the Last Two Decades was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.