Vietnam attracted $34.65 billion in registered international 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 degree in 5 years. Observers together with Harvard’s Progress Lab have additionally pointed to Vietnam’s more and more various and complex export base as a supply of robust long-run development prospects. By standard measures, the nation’s improvement mannequin is working.
Regardless of this, one other vital labor-market sign has been shifting in the other way. Because the late 2000s, the wage premium earned by staying at school has been falling, with significantly marked falls for college graduates. This doesn’t essentially imply that schooling has turn into much less useful in itself. It might as a substitute imply that the economic system will not be 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 aspects from shifting staff out of agriculture and into factories and providers can not proceed indefinitely; future development requires sustained productiveness development quite than labor reallocation alone. To date, Vietnam’s FDI mannequin has succeeded on employment amount however underperformed on occupational upgrading.
Drawing on 13 years of nationally consultant Labor Pressure Survey knowledge, a latest examine that we performed discovered that for each 100 jobs created in foreign-invested corporations, a further 100 jobs emerge in the identical district – a neighborhood employment multiplier of roughly one to at least one. This can be a massive spillover, and a compelling motive why FDI has turn into such a central a part of Vietnam’s development story.
International corporations accounted for round one-tenth of complete employment in 2023, up from nearly nothing earlier than 2000. Manufacturing unit 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 international 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 outlets, and retail stalls that spring up round industrial zones to serve manufacturing facility staff.
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 present workforce, wherein lower-secondary schooling predominates. Put merely, Vietnam’s FDI-led enlargement 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 robust financial returns to schooling.
Vietnam has continued to put money into schooling. By 2023, staff 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 staff. Simply 11.5 % of producing staff held a tertiary qualification, beneath the economy-wide common.
FDI-intensive provinces typically provide larger nominal wages. However the extra wage premium will not be bigger for better-educated staff. Furthermore, a part of the obvious wage benefit might merely compensate for larger housing and repair prices in fast-growing industrial places. FDI can subsequently elevate wages with out essentially strengthening the monetary reward for remaining in schooling.
This adjustments the alternatives dealing with households. When a fairly paid manufacturing facility job is obtainable after lower-secondary faculty, persevering with in schooling 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 beneath 60 %. Merely increasing college locations won’t resolve this demand-side drawback. Until the economic system creates extra jobs that reward superior abilities, Vietnam dangers experiencing a rising graduate mismatch, wherein educated staff are pushed into comparatively low-productivity providers, development by upper-secondary schooling 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 international funding. FDI has been central to Vietnam’s structural transformation, export development, and employment creation, and can proceed to be so.
But it surely does recommend 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 features, and sturdy local-supplier improvement. Policymakers ought to distinguish a neighborhood spending multiplier from a productive functionality spillover. A brand new restaurant or transport job is efficacious, however it isn’t equal to a brand new engineering workforce, 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 enterprise refined actions in Vietnam. These embody 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 direction of extra complicated 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 Get together of Vietnam in Could 2025, identifies the non-public sector as a very powerful driving drive of future development. That may be a step in the suitable path, however its success will likely be judged on whether or not a variety of home corporations can purchase expertise, uncover worthwhile niches, and scale up their operations.
Home corporations are indispensable to Vietnam’s financial future as a result of productive capabilities turn into embedded in an economic system solely when native companies can study from international 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 corporations to experiment, make investments, and rent expert staff. Export-promotion and network-building establishments may help them discover consumers, enter international worth chains, and study from worldwide companions.
Training 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 may entice extra refined actions and the cell expert staff they require.
Vietnam doesn’t want to decide on between international funding and home enterprises. It wants home corporations able to studying from, supplying and ultimately competing alongside international buyers; and international buyers whose success more and more relies on Vietnamese abilities and capabilities.
The truth that FDI has had a neighborhood jobs multiplier impact is value celebrating, however will not be proof of technological or human-capital upgrading. Vietnam’s earlier development mannequin mobilized labor from agriculture into manufacturing; the mannequin of the longer term should reward studying, innovation, and productiveness.