Vietnam is the latest in a string of countries to negotiate a trade pact and open up its markets to U.S. companies:

Vietnam and the United States have signed a new trade deal which will open the Southeast Asian country’s markets in virtually every sector.

It paves the way for Vietnam to enter the World Trade Organisation this year, 11 years after it began applying.

Vietnamese officials want to finish talks with the Geneva-based WTO in July.

The new agreement is the latest in a series of business deals and diplomatic steps by Hanoi to integrate its fast-expanding economy into the global trading system.

Vietnam will open its markets to a range of U.S. agricultural goods, services and manufactured products.

Since the end of the Vietnam War, the country has been ruled by a communist elite. But in the middle of the 1980s, that first generation of ideological leaders phased out, and the leadership introduced economic liberalization reforms much like those those undergone in China over the past couple decades. They were not like their predecessors. They did not care about created a harmonious and egalitarian society; only making money and ruling the country. In effect, Vietnam has really become an authoritarian capitalist state.

It is certainly a corporatist crony capitalism at best, but the influence of increased outside investment trickles down to aid in modernizing the entire country. Vietnam just got a late start. Over the past few years, China and India have become destinations for the offshoring of low-skill jobs in America. Now that Vietnam is entering the fray, it too is following in the cycle, as China and India lose these jobs to it.

Vietnam is rapidly emerging as a viable offshore IT development location, offering lower prices, less employee churn, and greater stability than rival sites in India.

That is the view of IT recruitment and outsourcing specialist Harvey Nash, which currently provides a range of services for application development, software testing, maintenance and support for UK customers including the Discovery Channel and the Princes Trust from its 1,200-strong development centre in Hanoi.

Paul Smith, global managing director for IT outsourcing at Harvey Nash, said the firm’s Vietnamese operations were currently growing at 40 percent a year and insisted the country has the credentials to challenge for much of the offshored IT work currently heading to India.

“Developers salaries are 15 to 20 percent lower than in India and 80 percent of Vietnamese graduates have science degrees, with 9,000 to 10,000 coming into the market each year,” Smith said.

Smith also argued that Vietnamese developers are less intent on moving to Europe or the US compared with their Indian counterparts, so staff turnover is far lower. “We experience less than five percent churn compared to 35 percent at some Indian service providers,” he said. “That is really important for development work as customers can feel pretty confident that the team that starts the project will finish it.”

???????Soft??????? benefits such as low crime rates, safe water and good infrastructure also make it easier to attract western clients, according to Smith. “We do development work for Äaccountancy software firmÅ CedarOpenAccounts,” he said. ” When they began working with us their HR department came and did due diligence and they have had no problem convincing UK staff to come out here.”

Look to the ’90s, when China was churning out cheap toys and t-shirts. Now it’s producing all ranges of higher quality products. India, too, is following that trend. Both are experiencing incredible growth. But with the emergence of countries like Vietnam as destinations for cheap labor and cheap products, India and China are going through their own off-shoring crises, and are being forced to scale the ladder upward toward modernization. They are even facing labor shortages in certain areas, hard as it may be to believe. Wages are being pushed up because of it, leading to better lives for people at the bottom rung of society.

Vietnam will follow their lead. Trade and investment lead to modernization, which has shown to be the eventual delivery-boy of democracy. Japan and South Korea half a century ago were considered backward countries, whose populations were far too predisposed to authoritarian leaders to ever become democratic. But they did. The title of “communist” really means nothing when compared to the processes that the country is actually undergoing. In fifty years, Vietnam may not be so backwards itself.