VIETNAM AND THE THREAT OF FALLING INTO THE MIDDLE INCOME TRAP

Abstract

The concept of middle income trap has been introduced in a plenty of research on a nation’s economic development status which refers to the fact that many nations after attaining a certain income will get stuck at that level. Vietnam got rid of the list of least developed countries to join the lower middleincome countries with an annual GDP per capita of 1,052 USD in 2008. Vietnam enjoyed a steady GDP growth of 5.5 – 6% per year in the period between 2008 and 2014. However, the Vietnam’s economy shows signs of slowdown, low productivity, low return on investment, and low economic transition. Vietnam is also warned to be under the threat of falling into the middle income trap. This paper aims to provide a clear picture of the middle income trap and the threat that Vietnam may fall into the middle income trap, thereby proposing some solutions for Vietnam to circumvent it and sustainably develop the economy.