A Theory of Change for transitioning from the informal economy to the formal economy in Viet Nam

This Theory of Change sets out a framework which can enable Viet Nam to accelerate progress towards its vision of a just and harmonious society and an inclusive, sustainable economy.

As Viet Nam continues its remarkable journey from one of the poorest countries in the world in the 1980s to its current status as a dynamic lower middle-income country, it has set itself the ambitious goal to reach upper middle-income status by 2030 and become a high-income country by 2045. This transformation will require that the country significantly reduces the proportion of women and men earning their living in the informal economy, currently accounting for two-thirds of employment. Expanding a thriving, resilient formal economy is well within the country’s grasp. In recent years, considerable economic and social reforms have been put in place to overcome exclusion and marginalization in the labour market, and this momentum continues.

Supporting transitions from the informal economy to the formal economy requires a broad vision, underpinned by the multiplicity of policy pathways needed to reach that objective. This Theory of Change, developed through consultations with tripartite partners and a broad range of stakeholders, sets out a framework which can enable Viet Nam to accelerate progress towards its vision of a just and harmonious society and an inclusive, sustainable economy.