Vietnam attracted $34.65 billion in registered overseas direct funding (FDI) within the first half of 2026, 61 p.c 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 Development Lab have additionally pointed to Vietnam’s more and more various and complicated export base as a supply of sturdy long-run progress prospects. By standard measures, the nation’s growth mannequin is working.
Regardless of this, one other necessary labor-market sign has been transferring in the other way. Because the late 2000s, the wage premium earned by staying in class has been falling, with significantly marked falls for college graduates. This doesn’t essentially imply that training has change into much less priceless in itself. It could 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 necessary implications for the Vietnamese authorities’s ambition of reaching high-income standing by 2045. The positive factors from transferring staff out of agriculture and into factories and providers can’t proceed indefinitely; future progress requires sustained productiveness progress somewhat than labor reallocation alone. Thus far, Vietnam’s FDI mannequin has succeeded on employment amount however underperformed on occupational upgrading.
Drawing on 13 years of nationally consultant Labor Pressure Survey information, a latest examine that we carried out discovered that for each 100 jobs created in foreign-invested companies, an extra 100 jobs emerge in the identical district – an area employment multiplier of roughly one to 1. It is a massive spillover, and a compelling motive why FDI has change into such a central a part of Vietnam’s progress story.
International companies accounted for round one-tenth of whole employment in 2023, up from nearly nothing earlier than 2000. Manufacturing facility jobs elevate family incomes and native spending, creating employment in different companies.
The composition of those further jobs, nevertheless, presents a extra sobering image. Of each 100 further 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 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 further 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, wherein lower-secondary training predominates. Put merely, Vietnam’s FDI-led enlargement has overwhelmingly been a jobs growth constructed on primary education somewhat 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, staff with tertiary {qualifications} accounted for about 18 p.c of whole employment. But the economic system has struggled to place these abilities to productive use. Manufacturing employed 25.4 p.c of the workforce however solely 16.5 p.c of tertiary-educated staff. Simply 11.5 p.c of producing staff held a tertiary qualification, beneath the economy-wide common.
FDI-intensive provinces typically provide increased nominal wages. However the further wage premium will not be bigger for better-educated staff. Furthermore, a part of the obvious wage benefit could merely compensate for increased 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 dealing with households. When a fairly paid manufacturing facility job is out there after lower-secondary college, persevering with in training turns into extra pricey, particularly for poorer households that can’t simply forgo a direct revenue. Grade 9 completion price is now greater than 90 p.c, however Grade 12 completion stays beneath 60 p.c. Merely increasing college locations is not going to remedy this demand-side drawback. Except 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 via upper-secondary training slows, and the nation continues to lose expertise overseas.
The coverage query, subsequently, is tips on how to make capital, know-how, and abilities complementary. This isn’t an argument in opposition to overseas funding. FDI has been central to Vietnam’s structural transformation, export progress, and employment creation, and can proceed to be so.
Nevertheless it does recommend that Vietnam ought to broaden its definition of high-quality funding. Registered capital, exports, and headline job numbers needs to be assessed alongside occupational upgrading, wage development, firm-based coaching, technical and managerial employment, engineering and analysis features, and sturdy local-supplier growth. 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 could 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 needs to be to make sure that funding shifts in 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 Occasion of Vietnam in Might 2025, identifies the personal sector as a very powerful driving power of future progress. That could be a step in the precise path, however its success shall be judged on whether or not a variety of home companies can purchase know-how, uncover worthwhile niches, and scale up their operations.
Home companies are indispensable to Vietnam’s financial future as a result of productive capabilities change 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 enable younger and medium-sized companies to experiment, make investments, and rent expert staff. 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 effectively. Industrial and concrete coverage ought to mix dependable infrastructure with universities, vocational schools, utilized analysis facilities, transport, housing, and public facilities. Such clusters might entice extra refined actions and the cellular expert staff 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 finally competing alongside overseas buyers; and overseas buyers whose success more and more is dependent upon Vietnamese abilities and capabilities.
The truth that FDI has had an area jobs multiplier impact is price celebrating, however will not be proof of technological or human-capital upgrading. Vietnam’s earlier progress mannequin mobilized labor from agriculture into manufacturing; the mannequin of the long run should reward studying, innovation, and productiveness.
