Inclusive Development Index is a newly created measurement which assesses 103 countries on eleven dimensions of economic progress.
According to a recent World Economic Forum (WEF)’s report titled ‘Inclusive Development Index 2018,’ Vietnam achieved an overall score of 3.98 on inclusive development on a 1 to 7 scale, with 1 equating worst and 7 equating best. The number places the country in the 33rd position among 74 developing countries.
The report divided 103 countries into two economic groups: advanced economies and emerging economies, with Vietnam belonging to the latter category. Each country was assessed on nine dimensions, divided into three pillars: Growth and Development, Inclusion, and Intergenerational Equity and Sustainability.
In Growth and Development, Vietnam scored moderately high in employment and life expectancy, with 76.7% of the population employed and a life expectancy rate of 66.6 years. Although gross domestic product (GDP) per capita and labor productivity remain below average, these numbers are expected to increase by 4.8% and 4.7% within five years, respectively.
Vietnam however, fairs rather poorly when it comes to Inclusion. WEF uses each country’s Gini coefficient of income and wealth distribution as indicators of income and wealth inequality, which is an index that measures the extent to which income and wealth distribution deviate from equal distribution represented by an index of 0 - thus the bigger the number, the wider the gap. For Vietnam, these numbers are at 42.2% for net income and 74.5% for wealth distribution. More alarmingly, in the next five years, wealth inequality will increase by 8.7%. The poverty rate is 11.6% and expected to drop by 5.7% in five years.
Regarding Intergenerational Equity and Sustainability, while the country is in a good shape given its healthy record in age dependency ratio and net savings (education expenditure included, carbon damage excluded), carbon emissions and public debts are two areas that need to be improved.
Started in 2017, WEF’s Inclusive Development Index is an effort to create an alternative measurement of economic growth to GDP index. Despite being the standard measure of economic development and a primary focus of policymakers, placing too much emphasis on GDP and economics risks missing the bigger picture and reinforcing social inequality. "Decades of prioritizing economic growth over social equity has led to historically high levels of wealth and income inequality and caused governments to miss out on a virtuous circle in which growth is strengthened by being shared more widely and generated without unduly straining the environment or burdening future generations," the WEF argues.
