Previous Year Question
Consider the following statements:
Vietnam has been one of the fastest-growing economies in the world in recent years.
Vietnam is led by a multi-party political system.
Vietnam’s economic growth is linked to its integration with global supply chains and focus on exports.
For a long time, Vietnam’s low labour costs and stable exchange rates have attracted global manufacturers.
Vietnam has the most productive e-service sector in the Indo-Pacific region.
Which of the statements given above are correct?
2 and 4 only
3 and 5 only
1, 3 and 4 only
1 and 2 only
Correct Answer: C
Detailed Solution
Statement 1 is correct. Following the Đổi Mới economic reforms initiated in 1986, Vietnam transitioned from a centrally planned economy towards a more market-oriented and globally integrated economy. According to the World Bank, Vietnam’s transformation from a low-income country into a middle-income economy represents a remarkable development success.
Its real GDP grew by approximately 7% in 2019. Despite the COVID-19 pandemic, Vietnam maintained positive growth in 2020 and 2021, followed by growth of approximately 8% in 2022. It can, therefore, be regarded as one of the faster-growing economies of recent years.
Statement 2 is incorrect. Vietnam does not have a multi-party democratic political system. It is a socialist republic, in which the Communist Party of Vietnam is the leading political force of the State and society. Therefore, describing Vietnam as being led by a multi-party political system is incorrect.
Statement 3 is correct. Export-oriented manufacturing and integration with Global Value Chains (GVCs) have been central to Vietnam’s economic growth.
Vietnam became a member of the WTO in 2007.
Its Free Trade Agreements have increased access to major global markets.
Electronics, mobile phones, machinery, textiles, footwear and furniture are among its important exports.
Foreign companies have integrated Vietnam into global supply chains by using it as a production and assembly centre.
Thus, Vietnam’s growth is closely associated with exports and integration into global supply chains.
Statement 4 is correct. Relatively low labour costs, an adequate workforce, political stability, investment-friendly industrial policies and a comparatively stable exchange-rate environment have helped attract Foreign Direct Investment. These advantages encouraged global manufacturers in electronics, garments, footwear and consumer goods to establish production facilities in Vietnam.
Statement 5 is incorrect. Vietnam’s digital and e-service sectors are expanding, but there is no accepted official comparative finding establishing Vietnam as having the “most productive e-service sector” in the Indo-Pacific region. The region also includes advanced digital economies such as Singapore, Japan and South Korea. Therefore, this superlative claim is incorrect.