Vietnam’s Đổi Mới reforms have transformed exports – but efficiency remains a challenge
RAGHUVIR KELKAR AND KALIAPPA KALIRAJAN |
Forty years after Vietnam launched its Đổi Mới reforms, the country has transformed from a centrally planned economy into a major player in global trade.
The reforms, introduced in 1986, opened the economy to foreign investment, encouraged private enterprise, reduced trade barriers and strengthened Vietnam’s integration with international markets. Membership of ASEAN in 1995 and the World Trade Organisation in 2007, followed by a series of free trade agreements, further accelerated this transformation.
Today, Vietnam is a leading exporter of labour-intensive manufactured goods and a significant destination for foreign direct investment (FDI). But new research suggests there is still considerable room to improve how efficiently Vietnam converts its export potential into actual trade.
Our research examined Vietnam’s merchandise export efficiency with its 45 largest trading partners between 2000 and 2023. Using a stochastic frontier gravity model, we found that Vietnam’s average export efficiency was 83 per cent.
In practical terms, this means Vietnam could potentially increase its exports by around 17 per cent without requiring additional infrastructure or institutional resources.
The finding is significant because Vietnam’s export growth over the past four decades has been substantial. Exports now account for more than 90 per cent of GDP, while lower labour costs, a growing pool of skilled workers and a stable business environment have helped attract manufacturing investment.
Trade liberalisation has played an important role. Lower import tariffs reduced the cost of inputs for manufacturers, while free trade agreements opened access to new markets and strengthened Vietnam’s participation in global supply chains.
Vietnam has also benefited from shifts in global manufacturing. The US-China trade war contributed to a substantial increase in Vietnamese exports to the United States, while Vietnam emerged as an attractive destination for businesses pursuing a ‘China + 1’ manufacturing strategy.
Yet export growth alone does not necessarily mean an economy is operating at its full export potential.
The research identifies domestic infrastructure and institutional conditions as important influences on export efficiency. These include the performance of ports and logistics systems, infrastructure, the ease of tracking shipments and the timeliness of trade processes and clearances.
These factors do not necessarily determine whether Vietnam can export a particular product. Rather, they influence how effectively exporters can use the facilities and systems available to them.
This distinction will become increasingly important as Vietnam seeks to move beyond its traditional strengths in labour-intensive manufacturing. The country’s longer-term ambitions include transitioning towards high-tech manufacturing and services, while pursuing digitalisation and green energy development.
We argue that further reforms targeting infrastructure, ports, logistics, tracking systems and timely clearances will be important if Vietnam is to realise more of its export potential.
For Vietnam, the next phase of Đổi Mới is therefore not simply about exporting more. It is about becoming more efficient at converting its economic capabilities, infrastructure and institutions into international trade.
As Vietnam approaches the 50th anniversary of Đổi Mới, the challenge will be to build on four decades of export-led growth and establish itself not only as an extensive export hub, but as a highly efficient one.
AUTHORS
Raghuvir Kelkar is a PhD Candidate in Griffith Business School, Griffith University and a member of the Griffith Asia Institute, and Kaliappa Kalirajan is from Crawford School of Public Policy, Australian National University.
This article is a synopsis of the journal article: Kelkar, Raghuvir, and Kaliappa Kalirajan. 2026. “ The Export Efficiency of Vietnam After 40 Years of Doi Moi Reforms,” Asia & the Pacific Policy Studies: e70081. https://doi.org/10.1002/app5.70081.