This paper reviews the two decades of economic development in Vietnam since Doi Moi, with the recurrent theme that integration with the world economy brings substantial benefits when accompanied by domestic reforms-when transition catches up with integration. In the 1990s, liberalisation of the agricultural sector-and of trade generally-led to rapid economic growth and reductions in poverty. Since 2001, addressing the extreme bias against the private sector has resulted in growth via development of labour-intensive industries as well as enabling Vietnam to climb onto the first rung of the ladder in the global supply chains of electronics and related manufacturing. However, deeper international integration has made the economy more vulnerable to external shocks. Although Vietnam achieved two decades of rapid growth as well as survived the global financial crisis in better shape than most other economies of similar size in the region, prospects of sustaining another decade of rapid growth are far from assured. Vietnam still has very large state-owned enterprises in capital-intensive industries. The recent extension of these large enterprises into real estate and finance contributed to de-stabilize the macro-economy, and administrative measures were adopted to pare back some of these 'non-core' activities. However, administrative measures are hard to sustain once a crisis is over. The Vietnamese government has the goal of transforming Vietnam into an industrialised society over the coming decade. The recent macroeconomic turbulence has demonstrated that the country needs strong macroeconomic institutions capable of stabilising the economy and setting the parameters for resumption of rapid growth. Thus there is a strong case for the development of modern public institutions as the focus of the third phase of reforms.