Can Việt Nam Become a High-Income Nation by 2045?

Việt Nam’s economic ascent has been remarkable, marked by steady GDP growth, record-breaking foreign direct investment (FDI), and an increasingly pivotal role in global supply chains. Yet, this progress has led the nation to a critical juncture. The defining question now is whether Việt Nam can break free from the “middle-income trap”—a stage where many emerging economies stagnate—to achieve its goal of becoming a high-income country by 2045.

Promising Numbers

According to the World Bank, the 2024 threshold for upper-middle-income countries starts at a gross national income (GNI) per capita of $4,496. [1] With an estimated GNI per capita of $4,490, Việt Nam is just $6 shy of this mark, suggesting it could graduate to the next income level in the upcoming classification cycle if its current growth trajectory is sustained. [2]

This potential milestone is built on a foundation of remarkable long-term performance. Over the last four decades, Việt Nam has maintained an average annual GDP growth rate of 6.37%, the highest among Southeast Asian economies. This resilience was on full display in 2020 when the economy grew by 2.86% at the height of the COVID-19 pandemic. [3]

More recent indicators also point toward continued progress. In 2024, labor productivity is projected to reach $9,182 per worker, a significant increase of $726 from 2023. [4] Furthermore, the growing presence of global tech giants such as Samsung, LG, and Intel has helped increase the share of high-tech products in manufacturing exports, solidifying Việt Nam’s standing within the global supply chain.

Yet, behind these promising numbers lie deep structural bottlenecks that could hold the country back.

Structural Bottlenecks

First and foremost, energy security has emerged as the economy’s “Achilles’ heel.” The widespread power shortages in northern Việt Nam during 2023 underscored a structural imbalance: electricity generation has failed to keep pace with rapid industrialization. [5] In response, between 2024 and 2025, the government has had to increase coal imports, [6] accelerate the Power Development Plan VIII (Quy hoạch điện VIII), and even revisit discussions on nuclear power. [7, 8] Without a lasting solution to guarantee a stable power supply, the country’s ability to attract and sustain high-tech FDI is under serious threat—a major concern among foreign investors. [9]

A second major challenge lies in trade and geopolitical risks. Việt Nam’s overdependence on a few major export markets creates a significant long-term vulnerability. This was highlighted by recent proposals in the United States to impose tariffs as high as 46% on Vietnamese goods, which were later reduced to 20%. Amid ongoing U.S.–China trade tensions, Việt Nam faces a double-edged sword: it benefits from supply chain restructuring but remains exposed to the risk of tariff retaliation.

Finally, and perhaps most importantly, Việt Nam’s innovation capacity remains weak. Investment in research and development (R&D) is limited. [10] While the share of high-tech exports is large, the domestic value-added content is low, as the country continues to specialize in assembly rather than original design or research. Data from the OECD and World Bank shows that local value-added content in some key industries is as low as 5–10%. [11] This makes it incredibly difficult to raise per capita income significantly, even as total export turnover hits new records.

Together, these constraints make escaping the middle-income trap a daunting challenge if Việt Nam is serious about becoming a high-income economy by 2045.

What Can Việt Nam Do?

To escape the middle-income trap, Việt Nam must execute a fundamental shift from a low-cost labor model to an economy driven by homegrown innovation. This requires a massive investment in research and development (R&D). [12] Currently, Việt Nam’s R&D expenditure is just 0.5% of its GDP, far below the 2.62% global average. [13] While the government aims to raise this to 2% by 2030, this ambition must be backed by concrete action. [14]

At present, most technological exchange occurs within foreign-invested corporations, leaving domestic firms confined to low-value assembly roles with little spillover to the local private sector. [15] As the World Bank emphasizes in its report,“Viet Nam 2045: Trading Up in a Changing World,” only when local enterprises can absorb and develop new technologies can Việt Nam move beyond its status as a “low-cost workshop.” [16]

This shift is impossible without significant investment in human capital. Việt Nam’s workforce is not yet equipped for a knowledge-based economy; only about 5% of manufacturing workers are highly skilled, and just 10% of the population holds a bachelor’s degree—both figures far below regional peers. [18] To address this, universities and vocational schools must pivot toward technical and practical skills training that prepares a workforce capable of meeting the demands of advanced industries.

Success hinges on institutional and policy reform. Việt Nam’s current innovation policy remains fragmented and underperforming, limiting the ability of businesses to effectively adopt new technologies. [17] To build an ecosystem that rewards genuine innovation, the government must enhance transparency and expand public-private partnerships in R&D. 

Việt Nam benefits from a solid foundation of political stability, robust FDI inflows, and a valuable demographic dividend. However, its slow progress in developing homegrown technological and research capabilities threatens to halt its ascent. Overcoming this will require a stronger commitment and more effective policies.

To avoid stagnation, Việt Nam must transition from its reliance on externally driven growth. Its success will be determined by its commitment to fostering a self-sustaining economy built on the pillars of innovation, education, and institutional reform.

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Nguyễn Lê Thái Bảo wrote this article in Vietnamese and published it in Luật Khoa Magazine on September 24, 2025. Đàm Vĩnh Hằng translated it into English for The Vietnamese Magazine.