Vietnam attracted $34.65 billion in registered overseas direct funding (FDI) within the first half of 2026, 61 % greater than the identical interval in 2025. On the identical time, realized FDI reached $13.03 billion, its highest first-half stage in 5 years. Observers together with Harvard’s Progress Lab have additionally pointed to Vietnam’s more and more various and complicated export base as a supply of sturdy long-run development prospects. By typical measures, the nation’s improvement mannequin is working.
Regardless of this, one other vital labor-market sign has been transferring in the wrong way. For the reason that late 2000s, the wage premium earned by staying in class has been falling, with notably marked falls for college graduates. This doesn’t essentially imply that training has develop into much less beneficial in itself. It might as a substitute imply that the economic system just isn’t creating sufficient jobs that make productive use of superior abilities.
Regardless of the actuality, it has vital implications for the Vietnamese authorities’s ambition of reaching high-income standing by 2045. The positive factors from transferring employees out of agriculture and into factories and providers can not proceed indefinitely; future development requires sustained productiveness development quite than labor reallocation alone. To this point, Vietnam’s FDI mannequin has succeeded on employment amount however underperformed on occupational upgrading.
Drawing on 13 years of nationally consultant Labor Drive Survey knowledge, a current research that we carried out discovered that for each 100 jobs created in foreign-invested companies, a further 100 jobs emerge in the identical district – an area employment multiplier of roughly one to 1. This can be a giant spillover, and a compelling motive why FDI has develop into such a central a part of Vietnam’s development story.
Overseas companies accounted for round one-tenth of complete employment in 2023, up from virtually nothing earlier than 2000. Manufacturing facility jobs elevate family incomes and native spending, creating employment in different companies.
The composition of those extra jobs, nevertheless, presents a extra sobering image. Of each 100 extra non-FDI jobs related to overseas funding, roughly two-thirds are in providers and solely one-third in manufacturing. Most are generated by small, typically casual family enterprises: i.e., the eating places, restore retailers, and retail stalls that spring up round industrial zones to serve manufacturing facility employees.
Trying on the occupations themselves reveals the identical sample. For each 100 FDI jobs, solely about 13 to fifteen extra high-skilled cognitive jobs emerge, in contrast with 41 to 45 blue-collar manufacturing jobs and 27 to 31 clerical or service positions. The tutorial profile of jobs created elsewhere within the native economic system largely mirrors Vietnam’s current workforce, through which lower-secondary training predominates. Put merely, Vietnam’s FDI-led growth has overwhelmingly been a jobs growth constructed on fundamental education quite than a abilities growth. That helps clarify why the nation’s spectacular academic progress has but to translate into equally sturdy financial returns to training.
Vietnam has continued to put money into training. By 2023, employees with tertiary {qualifications} accounted for about 18 % of complete employment. But the economic system has struggled to place these abilities to productive use. Manufacturing employed 25.4 % of the workforce however solely 16.5 % of tertiary-educated employees. Simply 11.5 % of producing employees held a tertiary qualification, under the economy-wide common.
FDI-intensive provinces usually supply greater nominal wages. However the extra wage premium just isn’t bigger for better-educated employees. Furthermore, a part of the obvious wage benefit might merely compensate for greater housing and repair prices in fast-growing industrial areas. FDI can subsequently elevate wages with out essentially strengthening the monetary reward for remaining in training.
This modifications the alternatives going through households. When a fairly paid manufacturing facility job is accessible after lower-secondary faculty, persevering with in training turns into extra expensive, particularly for poorer households that can’t simply forgo an instantaneous earnings. Grade 9 completion price is now greater than 90 %, however Grade 12 completion stays under 60 %. Merely increasing college locations is not going to remedy this demand-side downside. Until the economic system creates extra jobs that reward superior abilities, Vietnam dangers experiencing a rising graduate mismatch, through which educated employees are pushed into comparatively low-productivity providers, development by way of upper-secondary training slows, and the nation continues to lose expertise overseas.
The coverage query, subsequently, is easy methods to make capital, expertise, and abilities complementary. This isn’t an argument in opposition to overseas funding. FDI has been central to Vietnam’s structural transformation, export development, and employment creation, and can proceed to be so.
However it does counsel that Vietnam ought to broaden its definition of high-quality funding. Registered capital, exports, and headline job numbers must be assessed alongside occupational upgrading, wage development, firm-based coaching, technical and managerial employment, engineering and analysis capabilities, and sturdy local-supplier improvement. Policymakers ought to distinguish an area spending multiplier from a productive functionality spillover. A brand new restaurant or transport job is efficacious, however it’s not equal to a brand new engineering crew, provider certification, or switch of manufacturing know-how.
Introducing local-content or abilities quotas could be dangerous, and versatile buyers might merely reply by finding elsewhere. Extra promising are incentive-compatible measures that decrease the price of endeavor subtle actions in Vietnam. These embrace dependable infrastructure, industry-linked coaching, utilized analysis assist, innovation providers, and predictable regulation. Removed from abandoning labor-intensive FDI, Vietnam’s goal must be to make sure that funding shifts in the direction of extra advanced duties and creates ladders inside and past the manufacturing facility.
One other a part of the answer lies in Vietnam’s home economic system. Decision 68, issued by the Politburo of the Communist Social gathering of Vietnam in Could 2025, identifies the non-public sector as a very powerful driving pressure of future development. That could be a step in the fitting course, however its success might be judged on whether or not a variety of home companies can purchase expertise, uncover worthwhile niches, and scale up their operations.
Home companies are indispensable to Vietnam’s financial future as a result of productive capabilities develop into embedded in an economic system solely when native companies can be taught from overseas buyers, provide them, compete with them and develop improvements of their very own. Higher entry to finance, simpler formalization, and fairer competitors would permit younger and medium-sized companies to experiment, make investments, and rent expert employees. Export-promotion and network-building establishments may also help them discover patrons, enter world worth chains, and be taught from worldwide companions.
Schooling coverage should additionally join extra on to labor demand. Public-private coaching partnerships, apprenticeships, and collectively designed curricula can enhance matching, however they need to be evaluated by whether or not graduates transfer into jobs that use and deepen their abilities.
Place issues as properly. Industrial and concrete coverage ought to mix dependable infrastructure with universities, vocational faculties, utilized analysis facilities, transport, housing, and public facilities. Such clusters might entice extra subtle actions and the cell expert employees they require.
Vietnam doesn’t want to decide on between overseas funding and home enterprises. It wants home companies able to studying from, supplying and ultimately competing alongside overseas buyers; and overseas buyers whose success more and more is determined by Vietnamese abilities and capabilities.
The truth that FDI has had an area jobs multiplier impact is price celebrating, however just isn’t proof of technological or human-capital upgrading. Vietnam’s earlier development mannequin mobilized labor from agriculture into manufacturing; the mannequin of the long run should reward studying, innovation, and productiveness.
