Vietnam’s WTO Accession and the Pathway to a Global Playing Field: A Critical Perspective

Accession to the WTO marks a turning point in the process of Vietnam’s deep integration (both regional and international) under the export-oriented growth regime. As a result, the country is firmly embedded in strong trade inter-linkages within the region and between geographical areas. However, this integration may increase the country’s vulnerability through tighter external constraints. A key concern, then, is whether Vietnam’s trade-led growth is sustainable in the long run and whether it is resilient to any unpredictable shocks. This chapter examines Vietnam’s growth performance over the past years of integration efforts with reference to the balance-of-payments-constrained growth model. Given its heavy reliance on foreign-based determinants, we analyse how and through which transmission channels the changing structure of bilateral trade impacted Vietnam’s growth rate before and after joining the WTO. Our decomposition exercise by effect and by partner area shows that WTO accession affected Vietnam’s long-run growth rate through very different individual behaviours that shifted the country’s external constraint. This corroborates recent development studies that make a case for appropriate diversification (in export markets or import suppliers) to shift economies on to resilient growth paths.