Jeffrey Rosensweig, who directs the Global Perspectives Program at Emory University’s Goizueta Business School, called Vietnam “the single greatest growth opportunity in the world” during one of his many luncheon addresses in 1993. He also forecast that the 21st century would eventually be known as the “Asian Century.”
A former economist at the Federal Reserve Bank of Atlanta and currently an associate professor at Goizueta, Dr. Rosensweig’s predictions haven’t always been infallible. When Asia caught the “Asian flu” in the late 1990s, he had to recoil a bit and say that there would be a temporary rerouting through Latin America.
These days he remains positive about Vietnam and the other 10 member nations of the Association of Southeast Asian Nations (ASEAN). That’s a good thing from the perspective of Ly Le, who is studying at Emory for a master’s degree in political science with a focus on political economy.
A native of Vietnam, she was born in 1987, one year after her country started to implement economic reforms, and she grew up seeing the country change drastically as it became more engaged in international markets.
She came to the U.S. in 2005 to earn a bachelor’s degree in economics and business from Lafayette College in Pennsylvania and then moved to Emory for graduate studies.
Following an encounter at a reception during which Ms. Le asked Dr. Rosensweig questions about Asia’s future, she then asked him if he could become her mentor and he readily agreed.
On behalf of Global Atlanta, she conducted the following interview regarding the future of Vietnam. Dr. Rosensweig underscores that Atlanta, the state of Georgia and the Southeast generally are not paying enough attention to ASEAN. He particularly points to Indonesia and Vietnam as countries with growth economies and bright prospects.
Global Atlanta: Twenty years ago you mentioned that Vietnam would become the single greatest growth opportunity in the world, and that it would benefit not only from the manufacturing sector but also from the tourist trade. What factors prompted you to make that prediction?
Dr. Rosensweig: I was thinking then that Vietnam was grasping the importance of a capitalist economy, particularly that foreign investment is a good thing and not just about exploitation and imperialism.
The second thing I was thinking about at the time was the impact of demographics on emerging markets. Back then people were speaking about China and India because they had such huge populations. And certainly, they’ve done well, as have the BRICs.
I knew that these countries would be the most important but that they might not be the only ones to benefit from having very large populations and favorable demographic profiles.
Countries with a youthful population such as Vietnam have what I think is an advantageous structure for economic growth. For one thing, paying for pensions and elder health care are not yet huge economic drains.
In the case of Vietnam, it is a tragedy of war that there aren’t that many old people. But with something like a baby boom after the war, there are a lot of young people.
So there would be lots of people entering the labor force in the next 10 years. This clearly signals a country that will have a rapidly growing labor force, that will keep wages low, and that will be very attractive to foreign investors without the government budgetary problem of a rapidly aging society like exists in the so-called advanced economies.
But also, what I started noticing in Vietnam and throughout Latin America and Turkey, which is a country that also has a large population with a beautiful demographic structure, was that their birth rates were starting to come down.
These nations have had very high birth rates, leading to a large growing labor force, which is advantageous. But as birth rates came down, these nations weren’t going to have a rapidly growing group of young dependents, and therefore be unable to afford to educate them.
In other words, first the nation has a lot of babies, and a growing labor force. Then there is a transition to fewer babies, so the nation is able to educate them and invest in them more intensively. I saw this transition leading to the opening of trade.
Interestingly, here in Georgia, we are very fortunate because we have the international trade advantage of the world’s busiest airport. We also have the port of Savannah, the second busiest port on the east coast.
Vietnam benefited from a lot of investment in ports at the time of the Vietnam War. Those ports also have a very strategic position in Southeast Asia near routes, for instance, from the Middle East and India up to China, and Japan.
You can add to those assets the entrepreneurial attitudes of the Vietnamese, which is another reason to be optimistic about the country’s future.
Then I pointed out the final element in my speeches and in Global Atlanta in 1993: there would be a lot of people interested in going to Vietnam as tourists.
Veterans of the Vietnam War, or a family member of a veteran, may have a lot of bad memories, but also there’s an important legacy for those people. Vietnam has had an excellent opportunity to tap into heritage tourism. Its natural beauty, culture and cuisine add to the allure.
Global Atlanta: Has Vietnam lived up to your expectations?
Dr. Rosensweig: I think it has. I think what we see in Asia is a classic flying geese pattern.
Japan developed in the 1980s. Then came the development of South Korea and Taiwan also in the 1980s and 1990s.
Singapore and Hong Kong also were becoming wealthy. So I was thinking of Vietnam within that set of countries. But it took quite a while for my prediction to come to fruition.
If anything, I was early in my predication about Vietnam and the next wave of these geese flying over into industrialization included Thailand and Malaysia.
Vietnam clearly is not at the stage of development of Thailand and Malaysia, but it attracts investment due to its much lower wages. And although Vietnam did not get there first, it is much more attractive in the long run demographically.
Indonesia and the Philippines, with their huge populations, also developed before Vietnam.
And then came China, the huge goose flapping over. That changed the whole equation. When China got deeper into global capitalism, everything changed.
So Vietnam had many geese to follow and had to clear through, but now it’s a hot spot.
One thing I’ve been saying in my speeches to executives is that we know about the BRICs. Of course, China and India are a large part of the future.
Firms are investing in and importing from these huge markets, with 2.5 billion people in those two nations alone.
There are another 200 million people in Brazil and Brazil has tremendous natural resources.
But what is the next wave? What are the next populous emerging markets?
Will it be the CIVETS (not an original acronym of mine) referring to Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa?
Obviously Turkey and Egypt are going through and may continue to go through unrest as they move toward more open societies. One reason there’s been unrest is that they have a large group of people coming out of college with new ideas and ambition, and feeling frustrated with the lack of job opportunities.
To me Vietnam and Indonesia are anchors of the CIVETS and they present a lot of opportunities. I hope Atlantans learn more about them.
Global Atlanta: Do you think American firms have awakened to the opportunities in Vietnam and ASEAN countries?
Dr. Rosensweig: I think U.S. firms as a whole have awakened, particularly about Indonesia in the last few years.
It’s like Brazil was a few years earlier. Indonesia has been the darling of foreign direct investment that goes in and builds factories or invests in local firms and helps grow them.
Vietnam has been attracting a very good amount of foreign direct investment as well. There is the talk of China getting very expensive with their currency going up over 30 percent in U.S. dollars and wages going up at least 15 percent a year, compounding year after year.
Suddenly, Vietnam and Indonesia are the places that are still very connected to the sea routes and the logistic locations with very large populations of young workers.
But firms in the Southeast as a whole and even metro Atlanta may be so BRICs-focused that we are a little behind some West Coast firms and others when it comes to ASEAN itself. If I were to be asked places where firms should be establishing themselves, I’d have to say that it’s definitely Indonesia and Vietnam.
Global Atlanta: We think it’s very interesting you mentioned that a lot of firms in the Southeast are not paying enough attention to Vietnam and Indonesia. What do you think the two countries can do to attract more investment from such companies?
Dr. Rosensweig: One thing that interests me is the role of diasporas. For instance, if you think about Atlanta, one reason we are starting to prosper even in high-tech industries is we have a rapidly growing critical threshold of people who are immigrants from India, first generation Indian-Americans, and a fairly large Chinese community as well. There are places in the U.S. and Canada that have a large representation of the Vietnamese diaspora.
I don’t think we’ve reached the critical mass here in metro Atlanta where we have an active Vietnamese diaspora or Indonesian diaspora who will build those very personal ties that ultimately lead to foreign direct investment.
But we are getting close. There is a growth in the diaspora communities from these countries and I get excited when I see this kind of growth. We really need to think more about marketing ourselves as a city, as a state and as a region to these burgeoning economies.
We had Indonesian ambassador Dino Patti Djalal speak at Emory, which presented him with a Global Innovation Award. We had a few hundred people come from the Indonesian diaspora in Atlanta, an impressive community. They’re organizing themselves very well, and the ambassador has been very active in building something that was never existed before, an active Indonesian diaspora community throughout the world.
I think that they realize that Atlanta is the kind of place that is going to be very significant for international business, not just for trade, but for two-way investment. Atlanta now has to say to itself, “Let’s get in the game early” with the Vietnamese and Indonesian diasporas.
Global Atlanta: How do you think the U.S. will maintain its important role in Asia if it alienates China? And can they work together in the ASEAN region?
Dr. Rosensweig: To a certain extent, the U.S. will alienate China with the pivot towards Asia. There are definitely some military components to it. And if we tiptoe too much about “Oh, we might alienate them,” then it defeats the whole purpose of the pivot because the pivot is to say to China, in my mind, “We want to partner with you in business. We want to partner with you in economics. But we also have friends throughout East Asia.” Japan is a close ally of ours. We have a mutual security pact with Taiwan.
What I’m really saying is at some point you have to show some backbone; then at some other point, you say it’s because we have a joint positive goal in mind. We will all be much better off if we work together. And I think ultimately we will because there is a lot of money to be made by everybody and a lot to lose if we are not smart enough to work together.
Global Atlanta: How unified are the ASEAN members?
Dr. Rosensweig: ASEAN will be one of the six great economies of the 21st century. Yet it’s been a little slow to get there. Each nation is developing and coming together as a bloc. But ASEAN has been slow on moving towards any kind of labor or environmental standards and on human rights.
But I must say I remain a great optimist about ASEAN and Vietnam. The growth I predicted 20 years ago has come true and I foresee it continuing.
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