For instance, some of the benefits will become permanent because companies that are scrambling to find alternatives to China are now fully aware of the risk of concentration. Their intent to mitigate that risk means that once they establish a presence in Vietnam, they are likely to remain there in capacity, depending on how quickly Vietnam climbs the production value chain.
To a casual observer, Vietnam’s proximity to China would seem to be the primary reason why it is now a trade dispute winner. In fact, Vietnam prepared painstakingly for this opportunity that finally came.
Vietnam prepared by implementing policies of close coordination between central and regional governments, including:
- Fostering an environment in language and action that welcomes investment
- Investing in infrastructure, including roads and power generation
- Focusing on developing the skills required by employers
- Improving transparency
- Focusing on creating a regulatory climate, including tax and incentives policies, that make it easier for investors to commit to long-term plans
- Lowering barriers to foster trade
In short, Vietnam focused on the items one would typically find on the World Bank’s ease of doing business index. All is not perfect, and Vietnam still has further to go on this journey. But the country is undoubtedly committed to do more.
A blueprint for Africa
Vietnam is a blueprint for African governments as they seek to reap the rewards of trade. Vietnam’s success story is the strongest reminder yet that growth and development seldom happen by accident.
Globalization has its faults, but no reasonable person would dispute that many Asian countries tapped into globalization to lift millions of their citizenry out of poverty, and to create economic opportunities that will make it easier for the next generation to remain home rather than emigrate. Without trade, there’s no telling where the Chinese economy would be today.