Vietnam wants markets under socialist rule.
Vietnam, a nation that still languishes under the thumb of a government with an avowed communist ideology, intends to become Asia’s next “tiger economy.”
Ravaged by the civil war that split the country in two, and drew the United States into the sort of regional conflict that it had long sought to avoid, in 1975, Vietnam’s economy lay in ruins. Infrastructure was destroyed, agricultural output collapsed, and the state-controlled system struggled to feed its people. Only in 1986, with the Đổi Mới reforms, did Vietnam begin transitioning toward a “socialist-oriented market economy.”
Today, Vietnam has set its sights on becoming a “tiger economy” by 2045, the centenary of its independence. Authorities envision moving from low-cost manufacturing to high-income innovation, targeting areas like semiconductors, AI, renewables, and financial services.
Does this mark a shift away from the socialism that long defined its economics? Perhaps so: at the center of this shift lies Resolution 68, passed in May of this year. Resolution 68 declares, in a way seemingly paradoxical to the governing ethos of the state, that private enterprise is the “most important force” in driving growth. It’s a striking move: the Communist Party is knowingly pivoting toward capitalism, without relinquishing its monopoly on power.
How can they make this work? The classic presumption is that governing ideology and macroeconomic strategy cannot remain in contradiction with one another, and one must eventually triumph over the other. With a system of free-market economics encouraging dynamism, entrepreneurialism, and—ultimately—liberty, how can a socialist government allow such reforms without undermining its authority?
On closer inspection, however, this transition appears to be less a transition than an attempt to marry an interventionist government philosophy with the rapidly emerging industries of the 21st century. Whether it will work is a different question entirely.
Three main pillars underpin the strategy:
- Industrial upgrading. Vietnam is pouring incentives into semiconductors (an asset which has worked wonders for nearby Taiwan—could China’s pressure be behind this emphasis?), artificial intelligence, and green technology. US and Japanese firms have already pledged billions for chip design and assembly plants, and Hanoi hopes to position itself as a critical link in the global supply chain between Taiwan and the West.
- Mega‑infrastructure, including a $67 billion North–South high-speed railway to bind together export zones. The proposed line, a megaproject stretching the length of the country, is intended to reduce logistics costs and knit together its export-oriented manufacturing clusters.
- Financial modernization, in promoting Ho Chi Minh City in the south, and Danang in the center of the country, as special financial hubs with streamlined rules for investors and fintech startups. The goal is to embolden Ho Chi Minh City as a center of regional finance, capable of channeling both foreign investment and domestic savings into long-term industrial projects.
Vietnam’s approach is a rare, perhaps impossible fusion: a late-stage, one-party state of avowedly socialist principles, embracing private enterprise as its leading growth engine. Unlike the original East Asian tigers (such as Hong Kong or Singapore), or China’s grand-power model, Vietnam is pursuing a tiger strategy under one-party rule.
No comparable post-communist nation has adopted such an explicit “tiger” ambition in Asia. Laos and Cambodia remain small and institutionally fragile, keeping socialist economics to the basics, while China’s path is about great-power capacity, seeking to leverage its economic might to support its global power ambitions (such as with the Belt and Road Initiative), and not truly nimble tiger dynamism. Vietnam stands alone.
At least, in Asia, it does. Europe, on the other hand, offers several instructive parallels, though with limited applicability—largely because the “Baltic Tigers” (Estonia, Latvia, Lithuania) were post-communist nations.
Gaining that nickname for their explosive post‑2000 growth, those nations can largely attribute their successes to radical privatization, macroeconomic stability, EU integration, and digital government reforms. Estonia, for instance, logged GDP growth rates above 10%, with Latvia and Lithuania near that level, earning global recognition for their rapid convergence.
Further south, Slovakia earned the title “Tatra Tiger” in the early 2000s. A flat tax, pension reforms, and a pro-business climate lured massive foreign investment, especially in car manufacturing, pushing GDP growth to nearly 10% in 2006. Social costs, including higher unemployment and emigration, did follow, but the dynamism was undeniable.
These European cases show that post-communist systems can leap forward through reform and global integration. Yet, is Vietnam prepared to follow their examples? The answer seems to be a resounding “no”: for Vietnam, the added twist is that it wants tiger growth while preserving one-party rule.
Unlike Baltic or Polish examples, democratizing alongside the liberalization of the economy, Vietnam is betting that the Party can drive capitalist dynamism while maintaining ideological control; and it’s almost impossible to find examples of successful state-directed market growth.
Vietnam’s growth strategy remains hampered by heavy state involvement and distortions. The US still classifies it as a non-market economy, exposing exports to higher tariffs, while state-owned enterprises continue to dominate key industries. This reliance on state-owned enterprises risks entrenching inefficiency and cronyism rather than fostering the open competition that characterizes free-market capitalism.
Its leaders are wagering that revolution-born institutions can recalibrate to global capitalism, without surrendering political power. Can they pull it off?
