Vietnam has moved 5 positions, recently ranked 70 out of 148 surveyed economies globally, in the latest 2013-2014 Global Competitiveness Index (GCI) announced the World Economic Forum (WEF).

The improvement in macroeconomic environment, the control of inflation at a single-digit rate, and the efficiency of the local commodity markets are some basic elements helping Vietnam move up the ladder this year.

“Vietnam has seen important improvements followed by similar declines—partly reflecting the fragility of its economy - and now sits just one notch below its 2006 rank. Up five positions, Vietnam ranks 70th, regaining half of the ground it lost last year,” said the report.

It is mainly the result of a slightly better macroeconomic environment (87th, up 19 places) -after jumping to almost 20 percent. Inflation was back to single-digit levels in 2012 - and improvements to the quality of transport and energy infrastructures, albeit from a very low base (82nd, up 13).

Vietnam also advances in the goods market efficiency pillar (74th, up 17), thanks to lower trade barriers and a less heavy tax rate on businesses.

Fragile foundation Despite these encouraging developments, the foundation of Vietnam’s economy and prosperity remain fragile, as the country ranks no higher than 57th in any of the pillars except the market size pillar (36th), said the report.

It loses ground in several areas of the GCI, including labor market efficiency (56th, down 5) and financial market development (93rd, down five).

Another area of concern is technological readiness (102nd, down four). Although new technologies are spreading among the population, Vietnamese businesses are particularly slow to adopt the latest technologies for their business use (128th), thus forfeiting significant productivity gains through technological transfer.

Vietnam’s GCI performance is weakened once sustainability measures are considered.

In terms of social sustainability, the main issues are the country’s lack of access to healthcare services, its insufficient social mobility, and the large segments of its population in vulnerable employment.

Although Vietnam’s social sustainability is not very strong, the challenges are even more significant in the environmental domain.

First, regulations are assessed as lax and not well enforced, an attitude that is also reflected in the country’s low level of commitment to international treaties.

In addition, Vietnam has a high level of particulate matter concentration and CO2 emissions.

Moreover, the pressure on water resources and fish stocks is relatively high.

Overall, the rapid industrialization of the country is having a strong negative impact on the environment, including air and water pollution (not fully measured by this framework), which together may put the country’s long-term competitiveness and the living conditions of the citizens in jeopardy if more sustainable processes are not adopted.