A country level perspective of Vietnam can provide a good, general overview of what is taking place in the country—just imagine what a pixelated breakdown 230 times more granular could reveal. Such a granular deep dive is now available with a new dataset, Pixels of Progress, compiled by the McKinsey Global Institute (MGI). This specialized dataset provides a close-up view of human progress in Vietnam by breaking the country down into approximately 710 microregions.
The use of modern statistical techniques—such as luminosity to estimate economic activity (measured in terms of GDP) or child mortality to estimate life expectancy—enables the new dataset to provide a much more nuanced view of development than previous research. It enhances the understanding of Vietnam’s multifaceted economic and social progress in ways that could assist the government and the business sector to make better, more targeted decisions. While the statistical techniques are not perfect, we believe they are able to provide good approximations of the development process.
Vietnam’s economic progress in the 21st century has been clear: GDP per capita grew by approximately 7 percent annually over 20 years, from $3,691 in 2000 to $10,252 in 2019 (PPP, 2017, constant international dollars). Vietnam’s integration with global supply chains, which enabled growing and more sophisticated exports, contributed to this transformational growth. In 2000, Vietnam’s main exports were crude oil and textiles, at close to $4 billion each. By 2019, electronics had become the main export with $100 billion in annual value.1 Simultaneously, the Vietnamese average life expectancy has risen moderately to 74 years in 2019 from around 72.5 years in 2000.
A microview shows accelerated economic development in the past two decades
In our analysis, we look beyond those national averages—the more granular, pixelated view indicates that even faster progress has been made by some microregions across Vietnam (see sidebar, “Technical note”). At the same time, it exposes microregions that are still behind national averages and highlights examples within Vietnam that could help shape a path for local economic development.
To better understand the stories and dynamics at play at this subnational scale, we have built a more nuanced picture of Vietnam’s economic development over the past 20 years, using GDP per capita and life expectancy of around 710 microregions from 63 provinces between 2000 and 2019.
The biggest progress in GDP per capita is concentrated along the coastline and close to major cities
A pixelated look at Vietnam’s microregions reveals that most of those that show above-country average GDP per capita and annual growth in GDP per capita are located along the coastline and are close to major cities, such as Hanoi and Ho Chi Minh (Exhibit 1). These areas made the most progress in terms of GDP per capita growth from 2000 to 2019.
A more granular look also provides an added perspective: the real annual growth among microregions varied widely from 2000 to 2019 from about 1 percent to 12 percent. In 2019, the average GDP per capita was $10,252. However, the pixelated view shows this ranged among microregions from about $1,500 to above $25,000.
Life expectancy increased moderately, with poorer regions playing ‘catch up’
Vietnam’s average life expectancy increased by a small margin from 2000 to 2019—from 72 to 74 years. A more granular exploration of microregion development, on the other hand, indicates a significant improvement among the localities that showed low life expectancy at the turn of the century. In other words, those areas with the lowest life expectancy grew closest to the national average.
Our analysis shows that, in 2000, life expectancy differences among microregions were significant, with a gap of more than ten years, ranging from approximately 64 to 74 years. By 2019, this difference had been reduced to eight years, with life expectancy ranging between around 68 to 76 years (Exhibit 2).
The life expectancy of people living in the microregions along the border with China—for example, Muong Nhe, Muong Te, and Nam Nhun, all with average life expectancy of around 70 to 71 years—was still the shortest, but the gap between them and the life expectancy of their compatriots living in microregions along the country’s coastline and close to Hanoi, Ho Chi Minh, and other large cities (75 to 77 years), narrowed. Microregions in the Central Highland, Midland, North Mountains, and South Central Coast showed the greatest leap in life expectancy between 2000 and 2019, with an increase of three to four years.
In the past 20 years, more Vietnamese have joined the ‘blue club’ of prosperity and longevity
While uneven economic prosperity and growth is a reality within Vietnam, our research shows that microregions that started with lower levels of life expectancy and GDP per capita in 2000 are slowly catching up with more prosperous ones (Exhibit 3). To better analyze this progression, we divided microregions into three categories:
- Blue microregions are defined as the global top 30 percent of GDP per capita and life expectancy in 2000. This translates into a relatively healthy income in Vietnam of more than $8,300 and a life expectancy over 72.5 years.
- Orange microregions are viewed as regions that were in the global bottom 30 percent in 2000, where GDP per capita and life expectancy were under $2,300 and 65.6 years, respectively.
- Gray microregions are neither blue nor orange, but lie in the middle between the two.
We analyzed Vietnam in terms of these three categories to highlight growth from 2000 to 2019 at a pixelated level.
Blue microregions’ percentage of population increased: In 2000, only 1 percent of the population (about one million people) lived in blue microregions—residents of Hanoi, Ho Chi Minh, and people who lived within proximity of major cities or provinces. In contrast, by 2019, blue microregions had emerged across Vietnam and were home to 37 million Vietnamese, a 40-fold increase, reflecting that life expectancy spans and income growth had extended to more microregions around major cities—for example, An Lao from Hai Phong, Bac Tan Uyen from Binh Duong, Cam Le from Da Nang, Districts 7 and 9 from Ho Chi Minh, and Huong Thuy of Thua Thien Hue.
Orange microregions decreased: In the same microregions in 2000, income was below $2,400 and life expectancy was less than 65.6 years. Approximately 300,000 Vietnamese (0.4 percent of the population) living along the border with China belonged to the orange category and experienced lower living standards (such as Muong Te-Lai Chau, Nam Nhun-Phong Tho, and Yen Minh-Ha Giang). In contrast, none of the 710 microregions were in the orange zone by 2019 (Exhibit 4).
Beyond the numbers: Four archetypes of Vietnamese economic development
A granular look at successful microregions in Vietnam revealed that, beyond mere numbers, the underlying reasons for their respective development varied. The following four regional examples illustrate the different indicators, showing economic progress related to specific sectors, such as agriculture, industry, services, and tourism. By dissecting these, we aim to illustrate potential pathways to sustainable growth in Vietnam.
Muong Te District: From food and healthcare scarcity to security
Muong Te, in Lai Châu Province, shows an overall improvement in quality of life. Average life expectancy in Lai Châu, along with similar provinces in the mountainous and highland regions, was among the country’s lowest in 2000 but leapt the most from 2000 to 2019, mainly due to changes to food security and better access to healthcare.2
Food security improved in Muong Te District, most likely as a result of a focus on producing high-yield crop varieties from modernized agriculture techniques. For example, the yield of rice in Muong Te improved by 11 percent from 2015 to reach 42 quintal per hectare in 2019. Corn yield also improved, by 10 percent from 2015 to reach 26 quintal per hectare in 2019.3
Improvements in the quality of healthcare were evident in the province over the 20-year period. Healthcare workers were trained or retrained through, for instance, a ten-year project between the government and an NGO, Church World Services, that focused on healthcare and education from 2006 to 2017 in Muong Te.4 In addition, investments were made to upgrade medical facilities at district level (for example, by adding more patient beds and modern medical equipment). As of 2019, Muong Te District had a total of 20 medical facilities, 130 patient beds, and about 220 healthcare workers—a significant amount for a small district area.5
Viet Yen District: From fields to factories
Viet Yen District in Bac Giang Province experienced a significant change in its GDP per capita as a result a nearly threefold increase between 2000 and 2019. While the area once mainly consisted of agrarian crops such as rice paddies, Viet Yen has now emerged as an economic hub of Bac Giang.6
This change was likely boosted by changes to the industrialization of the area by means of large-scale projects (projects with total registered capital of above $100 million).7 Bac Giang Province’s government instituted various policies that included focusing on removing challenges for investors and developers. For example, investors had a central point of contact—the Department of Planning and Investment—and were offered incentives for leasing land, funding support for clearing land, and vocational training for local workers.8 In 2001, foreign direct investment (FDI) alone was three times greater than that of the previous ten years combined.9 In 2019, Bac Giang Province ranked sixth nationwide in attracting FDI.10
This wave of industrialization and investments also came to the Viet Yen District. It is currently home to four industrial parks, which together make up 70 percent of the land area of all industrial parks in Bac Giang Province.11 As of 2023, Viet Yen’s total industrial production was in the region of $14 billion (350 trillion Vietnamese dong), or 79 percent of Bac Giang’s total production in the same year.12 More investments followed, paving the way for the construction of industrial zones, modern infrastructure, and educational institutions. These developments attracted not only foreign investors but also more domestic investors, both looking to capitalize on the district's strategic location and skilled workforce.
Factories became the center of Viet Yen District, with manufacturing and electronics brands setting up facilities and ecosystems, which generated employment opportunities and benefited the local economy. As a result, Viet Yen is now one of Vietnam’s major industrial hubs, hosting factories for big tech suppliers such as Foxconn and Luxshare.13
Viet Yen’s transformation was not confined to the industrial sector. Viet Yen District was recently upgraded to Viet Yen Town in December 2023, making it the second biggest township in the province, behind only Bac Giang City.14 Viet Yen Town is expected to be a mixed-use development combining industrial, residential, commercial, and cultural elements, connected to Bac Giang Province, Hanoi, and the northeastern region of the country by a national highway system.15 There are further plans to grow into an “industrial cluster” (approximately 4,397 hectares) complimented by a new “urban complex” (around 2,096 hectares).16
Ho Chi Minh City’s District 2: From paddy fields to skyscrapers
District 2 in Ho Chi Minh City (now Thu Duc City)—the microregion with the highest GDP per capita in Vietnam by 2019—wasn't always the city it is today. Once a rural district with coconut groves and rice paddies, District 2 is now home to a new central business district, Thu Thiem, Thao Dien, and a large portion of the city’s expatriate community, all of which help form a thriving business precinct in Ho Chi Minh City.17
District 2 has become a hub for “business, services, industry, culture, and sport,” a move that opened doors for developers to embark on projects during the past 20-year period between 2000 and 2019.18 Building Thu Thiem Bridge and Thu Thiem Tunnel are examples of such projects: completed in 2008 and 2011, respectively, these thoroughfares made it easier for people to get from District 2 to District 1 and the rest of the city center, which had previously been separated from District 2 by the Saigon River. Before this bridge and tunnel were built, crossing the river involved either taking a ferry or a circuitous road.19
Another indication of the region’s urbanization is how land is used. In 1997, when District 2 was becoming urbanized, about 50 percent of total land in District 2 was used for agriculture; by 2019, this had dropped to about 12 percent, in contrast to residential and commercial infrastructure that used about 64 percent of the land.20
In 2018, District 2, District 9, and Thu Duc merged into Thu Duc New City.21 This brought synergies between the three districts strategically located beside the Saigon River and within proximity to District 1. The merger aimed for Thu Duc New City to become the next leading hub for technology, finance, and services, stimulating public and private investment into the city. The strategic riverfront and infrastructure development has attracted a number of global companies, and the growing investment into the area attests to Vietnam’s potential as a high-tech manufacturing base.22
Due to its transformation, District 2 (now part of Thu Duc City) is currently the microregion with the highest GDP per capita and average life expectancy in Vietnam. The Vietnamese government has plans for the district to become a mixed-use central business district with residential spaces and public transit systems to meet the demands of Ho Chi Minh City and its 130,000 residents over the next 20 years.23
Phan Thiet: From fishing villages to tourist hubs
Despite having pristine beaches and favorable conditions for watersports, Phan Thiet—a coastal town in Binh Thuan Province—was a relatively unknown destination in 2000. There were limited accommodation options available at the time, with only three hotels in the province.24 However, between 2000 and 2005, infrastructure for tourism was developed that enabled economic growth for the province.25 By 2019, Binh Thuan Province had 557 tourist accommodation establishments with over 16,000 rooms.26
As a result, the number of visitors to Phan Thiet grew 12-fold between 2000 and 2019, increasing from 513,000 tourists in 2000 to 6.4 million in 2019, of which 775,000 were international visitors from around the world.27 This translated to about $650 million (15 trillion Vietnamese dong) in tourism revenue in 2019.28 The tourism industry created jobs, providing a stable income for local workers and improving Phan Thiet’s GDP per capita about fivefold between 2000 and 2019.
The snapshots of these four microregions—based on the pixelated views provided by the Pixels of Progress dataset—illustrate how a much more nuanced analysis can enhance an understanding of successful development in specific areas. Such an understanding could, in turn, assist the private and public sectors in making targeted decisions, including in areas that still need to catch up to the rest of the country.
Overcoming the challenges: Develop with diversity
While closing the gap between low- and middle-income status in Vietnam is still progressing, the pixelated view of past 20 years paints a picture of collective progress in economic prosperity and life expectancy. The reduction in the number of orange microregions and the expansion of blue microregions are indicative of the country’s development.
The diversity of growth opportunities is highlighted by the district case studies: improved agriculture practices yielding increased output from regions such as the Mekong Delta; productive industrial hubs around major cities; a growing services and technology sector in Ho Chi Minh City; and emerging tourism in coastal areas. These microregions represent Vietnam’s potential ability to prosper in diverse economic spheres in the future. The increasing diversity is reflected in Vietnam’s economic complexity index: between 2000 and 2021, the country leapt from 93rd position globally to 61st.29
Zooming in on Vietnam with a granular lens sets out in detail the country’s 20-year development journey, illustrating underlying complexities and revealing some surprises. This microregional view could help businesses understand how to better unlock opportunities not visible at a country-level view, such as new markets, optimal operations locations, and talent pools. It could also provide decision makers with precise information and insights, pinpointing needs. Our analysis suggests that it could further help to enhance Vietnam’s economic insights—for example, provinces could see what differentiates them from other regions of the country and what strengths to focus on as a result.
Capitalizing on the country’s economic diversity and addressing uneven development could help ensure wider-spread development across microregions.
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