Vietnam

Vietnam achieved an economic transformation that few Communist parties have managed: maintaining political control while creating one of the world's fastest-growing market economies. The formula—gradual liberalization under Party supervision—made Vietnam the preferred alternative as companies diversified supply chains away from China.

The country's 20th century was defined by war. French colonization from the 1850s, Japanese occupation during World War II, victory over France at Dien Bien Phu in 1954, partition, American intervention, reunification in 1975, and postwar isolation created a trajectory of conflict that delayed economic development by decades.

The turning point was Doi Moi—"renovation"—launched in 1986. Facing economic crisis and the evident success of capitalist neighbors, the Communist Party adopted market reforms while retaining political monopoly. Collective agriculture gave way to household farming. State enterprises faced competition. Foreign investment became welcome. Trade opened.

The results were remarkable. GDP growth averaged over 6% for three decades. Poverty rates fell from over 50% to under 5%. Manufacturing expanded from textiles and footwear to electronics and machinery. Samsung alone accounts for roughly 25% of Vietnam's exports through its massive phone and electronics facilities.

The supply chain diversification accelerated after 2018. US-China trade tensions made "China plus one" strategy essential for multinationals. Vietnam offered low wages, political stability, coastal access, and a workforce familiar with manufacturing from years of Japanese, Korean, and Taiwanese investment. Apple expanded iPhone assembly through Foxconn facilities. Semiconductors gained attention as TSMC and Intel considered Vietnamese operations.

The 2025 challenge is moving up the value chain. Wages are rising. Competitors—Indonesia, India, Bangladesh—offer lower costs. The infrastructure that enabled assembly manufacturing requires upgrading for sophisticated production. Energy supply, particularly reliable electricity for semiconductor fabrication, remains uncertain.

The Communist Party's political control continues alongside capitalist economics, creating tensions that the system manages rather than resolves. Land remains technically state-owned. Media is controlled. Political opposition is suppressed. Yet entrepreneurship flourishes, foreign investment flows, and the population's material conditions have improved dramatically.

By 2026, Vietnam must demonstrate it can produce, not merely assemble—moving from soldering components designed elsewhere to developing intellectual property of its own. The manufacturing boom that made Vietnam a winner from supply chain diversification requires transformation into technological capability. That transition is underway, with outcomes not yet determined.