Vietnam has officially joined the World Bank's upper-middle-income group, marking a major milestone after nearly four decades of economic reforms and opening a new chapter in its journey toward becoming a high-income economy by 2045.
A milestone built on nearly 40 years of reform
Vietnam has officially joined the upper-middle-income group, marking a new stage in its journey toward becoming a high-income economy by 2045. Photo by Nguyen Hue.
The World Bank has reclassified Vietnam as an upper-middle-income economy after the country's gross national income (GNI) per capita increased from US$4,490 in 2024 to US$4,970 in 2025.
"It took Vietnam around 17 years to move from the lower-middle-income group to the upper-middle-income group. This is clear evidence of the effectiveness of the country's reform process," said Dr. Le Duy Binh, Director of Economica Vietnam.
Speaking to VietNamNet, Binh said Vietnam's greatest economic driver over the past four decades has been the reform process launched in 1986. Institutional and economic reforms enabled the country to adopt an appropriate growth model and laid the foundation for successive waves of reform.
Vietnam gradually transitioned from a centrally planned economy to a market-oriented economy while opening both domestic and international markets. According to Binh, this transformation created the conditions necessary to expand production, attract investment and sustain economic growth.
He added that, alongside market liberalisation, Vietnam diversified its economic sectors, creating opportunities for the private sector as well as domestic and foreign investors to participate more actively in the economy.
"When markets expand, production follows, and production stimulates investment," he said.
According to Binh, investment - particularly private investment and foreign direct investment (FDI) - has been one of Vietnam's most important growth engines throughout the past four decades.
Exports have also been a major driver of growth. However, he argued that the concept of market expansion should be viewed more broadly, noting that growth comes not only from exports but also from the continued development of Vietnam's domestic market.
Economic reforms have also improved household incomes and purchasing power. Combined with social welfare policies, rising living standards have strengthened consumer confidence and domestic demand, providing an additional engine for economic growth.
Associate Professor Nguyen Huu Huan of the University of Economics Ho Chi Minh City shared a similar assessment, saying Vietnam's elevation to upper-middle-income status is the result of four major growth drivers.
First, he said, it reflects nearly 40 years of economic reform. Vietnam transformed itself from a centrally planned economy into a socialist-oriented market economy, gradually opening trade, attracting foreign investment and integrating deeply into global value chains. This transformation significantly expanded the country's economic scale, productive capacity and per-capita income.
The second driver has been Vietnam's growing integration into international trade and exports. The country has become a major regional manufacturing hub in sectors including electronics, textiles, footwear, furniture, processed agricultural products and logistics. At the same time, recent global supply chain shifts have created new opportunities to attract investment, expand production and strengthen Vietnam's position in international trade.
Huan also attributed the achievement to macroeconomic stability, improvements in the investment environment and institutional reforms. For many years, Vietnam has maintained relatively strong economic growth, controlled inflation, preserved political and social stability and continued infrastructure development, strengthening investor confidence.
In addition, the expansion of the private sector, rapid urbanisation and the emergence of a growing middle class have become important domestic growth drivers. Rising incomes have increased demand for financial services, education, healthcare, housing, technology and higher-quality services, gradually reducing dependence on low-cost labour and processing-based growth.
The key to achieving high-income status
Vietnam needs to improve labour productivity and workforce quality by developing highly skilled workers in technology, artificial intelligence, data, semiconductors and logistics. Photo by Hoang Ha.
Looking ahead to Vietnam's goal of becoming a developed high-income country by 2045, Binh said the country's most important lesson is not to become complacent about its achievements.
Significant challenges remain, particularly the risk of falling into the so-called "middle-income trap" that has affected many economies after reaching upper-middle-income status.
Vietnam therefore needs to continue deepening the reforms already underway while shifting to a new growth model better suited to its next stage of development. The previous model successfully helped transform Vietnam from one of the world's poorest countries into a developing economy and later a lower-middle-income country, but may no longer be sufficient to sustain rapid progress.
"Vietnam must continue innovating, improving its investment climate, business environment and institutions while building a more suitable growth model to achieve the goal of becoming a developed high-income economy," he said.
According to Binh, Vietnam can no longer rely primarily on traditional growth factors such as low-cost labour and natural resources.
"We must constantly innovate, renew ourselves and continue identifying new sources of growth. Science and technology, innovation and total factor productivity will be the key drivers enabling Vietnam to become a developed high-income country," he said.
Meanwhile, Huan argued that Vietnam should continue institutional reforms to create a transparent, competitive business environment that protects property rights and unlocks social resources more effectively. The state should shift further from a regulatory role toward one focused on enabling development, with businesses and citizens placed at the centre of policymaking.
Vietnam also needs to improve labour productivity and human capital by training highly skilled workers in technology, artificial intelligence, data science, semiconductors, logistics, green energy and international management. Greater priority should be given to higher education, vocational training, applied research and stronger links between universities and businesses.
The economist also highlighted the importance of the private sector. A high-income economy requires domestic enterprises with sufficient technological, managerial and financial capabilities to participate more deeply in global value chains. Policies should therefore facilitate access to long-term financing, land, technology, data and international markets.
In addition, Vietnam should further develop its capital markets, corporate bonds, investment funds, insurance, green finance and digital finance to mobilise long-term funding for infrastructure, innovation and the green transition.
According to Huan, science, technology and innovation must become the country's primary growth engine through stronger support for research and development, regulatory sandboxes, artificial intelligence, fintech, semiconductors, the digital economy and regulated digital assets.
Finally, he said economic growth must go hand in hand with the green transition and sustainable development. As major export markets increasingly tighten carbon emission standards, ESG requirements and traceability regulations, green transformation is becoming not only an environmental necessity but also a prerequisite for maintaining the competitiveness of Vietnamese businesses and deepening their participation in global value chains.
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