In its latest World Economic Outlook report, the International Monetary Fund (IMF) sees Vietnam’s gross domestic product (GDP) per capita overtaking that of the Philippines starting this year.

The IMF projects Vietnamese GDP per capita to be US$3,498 in 2020 versus the Philippines’ US$3,373. It has been a long but steady climb. Vietnam’s income per capita was just 83% of the Philippines’ in 1980 so it took four decades.

GDP per capita is just one of many indicators of national development and not even the best one at that. It doesn’t say anything about how the gains of this economic output are distributed between Filipinos nor between Filipinos and foreigners. It can also be artificially boosted such as with an uptick in infrastructure spending, as the Duterte administration has been doing.

Still, Vietnam overtaking the Philippines is significant. And it’s not just because of the huge difference in COVID response.

The Duterte administration’s COVID response is a factor but really just made the inevitable happen earlier. Vietnam famously responded well to the pandemic and was able to keep its economy growing even if at a slower rate. In contrast, the Duterte administration’s poor and still tepid response has caused the worst economic collapse in the region and indeed in the country’s history.

This was enough to make Vietnam overtake the Philippines only because Vietnam has been closing the gap with the Philippines for years and was already on the cusp of overtaking us when the pandemic broke out.

There is of course a lesson here to greatly improve the country’s pandemic response. The administration taking so long to respond and, even then, being so sparing in its response just made the problem bigger and is making recovery more difficult.

The deeper lesson though is looking at why Vietnam was able to catch up to begin with. Its rapid and sustained economic growth doesn’t actually come from simply opening up its economy and seemingly embracing the free market.

Previously poorer Vietnam has been implementing a state-led development strategy for decades. It’s the sort of non-neoliberal model that our economic managers are too blind to even consider.

Which is why the Philippine economy has been recklessly liberalized and privatized according to free market dogma. This has eroded domestic agriculture and industry and made the country over-reliant on external sources of growth like remittances, government spending, foreign investment, and debt.

These are not sustainable sources of growth. Which also explains why, for instance, the economy was already slowing for three consecutive years even before COVID.

In contrast, Vietnam has been opening up its economy while ensuring state ownership or control of strategic enterprises in agriculture, mining, telecommunications, railways, chemicals, electricity, water, oil, cement, steel, and other heavy industries as well as in banking and finance. Foreign investment is seen as a means to national development — not, as in the Philippines, an end in itself.

Their economic growth has then been more broad-based, robust and sustainable. The extent to which it has been equitable is another set of issues entirely.

In any case, our economic managers would do well to stop being blinded by their neoliberal dogma and start taking a more strategic view of national development. Without radical changes in our economic policies the Philippines will just keep getting left further behind. But, of course, not without keeping a few very rich.