The Vietnam War had devastated the economy of Vietnam. Apart from widespread destruction of urban and rural infrastructure, heavy bombings and mines had savaged agricultural activities. Millions of people were displaced by the conflict, and over two million people were killed. Upon taking power, Vietnamese communists created a command economy in the nation. Collectivization of farms, factories and economic capital was implemented, and millions of people put to work in government programs. For many decades, Vietnam's economy was plagued with inefficiency and corruption in state programs, poor quality and underproduction and restrictions on economic activities and trade. It also suffered from the trade embargo from United State and most of Europe after Vietnam War. Furthermore, the trade partners of the Communist Blocks began to erode. In 1986, the Sixth Party Congress introduced significant economic reforms with market economy elements as part of a broad economic reform package called "d?i m?i" (Renovation). Private ownership was encouraged in industries, commerce and agriculture. In many ways, this followed the Chinese model and achieved similar results. On one hand, Vietnam achieved around 8% annual GDP growth from 1990 to 1997 and continued at around 7% from 2000 to 2002, making it the world's second-fastest growing economy. Simultaneously, foreign investment grew three-fold and domestic savings quintupled. Manufacturing, information technology and high-tech industries form a large and fast-growing part of the national economy.

Urban unemployment has been rising steadily in recent years due to high numbers of migration from the countryside to the cities, and rural unemployment, estimated to be up to 35% during non-harvest periods, is already at critical levels. Layoffs in the state sector and foreign-invested enterprises combined with the lasting effects of a previous military demobilization further exacerbated the unemployment situation. The country aims to become a member of the WTO, perhaps as soon as October 2006. In May 2006, Vietnam negotiated a bilateral trade agreement with the US that marked the completion of the bilateral negotiations with WTO members the country needed to qualify for accession to the organization. Among other steps taken in the process of transitioning to a market economy, Vietnam in July 2006 updated its intellectual property legislation to comply with TRIPS. Vietnam's chief trading partners include Japan, Australia, ASEAN countries, the U.S. and Western European nations.

As a result of several land reform measures, Vietnam is now the largest producer of cashew nuts with a one-third global share and second-largest rice exporter in the world. Vietnam has the highest percent of land use for permanent crops, 6.93%, of any nation in the Greater Mekong Subregion [4][5]. Besides rice, key exports are coffee, tea, rubber, and fishery products. However, agriculture's share of economic output has declined, falling as a share of GDP from 42% in 1989 to 26% in 1999, as production in other sectors of the economy has risen.