Vietnam climbs global competitiveness ranking thanks to market size: report

'Significant improvements' are still needed to institutional performance, higher education and business innovation.

Vietnam has risen five places from last year in the latest competitiveness report released by the World Economic Forum (WEF) on Wednesday.

The country's ranking of 55th out of 137 economies is its best in five years and puts it among the six economies with the best average growth rates in the past decade, together with large emerging economies such as Thailand, India and Nigeria.

Vietnam’s competitiveness is significantly driven by its market size, which ranks 31st of all economies, according to the annual report which measures national competitiveness based on a set of institutions, policies and factors that determine the level of productivity.

It said Vietnam has maintained its export-driven growth successfully despite the withdrawal of the U.S. from the Trans-Pacific Partnership trade deal earlier this year.

However, Vietnam still needs to make “significant improvements” to institutional performance, higher education and business innovation.

“Firms perceive that the lack of an educated workforce constitute a significant hurdle for doing business,” the report said.

An opinion poll conducted by the WEF found that access to financing, an inadequately educated workforce, corruption, poor work ethics and tax regulations are the five biggest “problematic factors” for doing business in Vietnam.

This year, the country remains in the bottom five of the 17 East Asia-Pacific economies, narrowly surpassing the Philippines (56) and Cambodia, Laos and Mongolia.

The report said these economies could all make large gains at a relatively low cost by improving their performance in infrastructure, health and education.

Switzerland topped the ranking again this year, followed by the U.S. and Singapore. Hong Kong and Japan also made it into the top 10, which is dominated by European economies.

Poor and war-torn African countries prop up the list.