Vietnam is a medium-sized country, located in the Southeast Asia. Modernization began in 1986 when Vietnam opened the market and implemented a renovation policy named “DoiMoi”. Since then the structure of the economy has shifted towards a reduced agricultural sector, and larger industrial and service sectors. As the result, overall living standards in Vietnam have improved significantly. However development is not equally distributed. Some regions are now moving from industrial to service/knowledge economy, while other regions are still in the agricultural economies. Over time this inequality in rate of development between different areas led to dramatic gaps. Recognizing the increasing development gap between regions, between urban and countryside, and among social classes, the purpose of this study is to assess the role of modernization process.

Using fundamental development theories to build up the theoretical framework comprising modernization theory as the main theory, neoclassical theory and circular cumulative causation theory, the study will find reasons for the trends/differences or where the data does not behave as theory expects. Based on Chuanqi He’s Modernization theory (He, 2010), the regions are grouped into agricultural, industrial, service development stages. The study has find out that the gap between industrial region group and agricultural group has become larger year by year and though there are many catch-up efforts from Central Coast and Mountainous North, the gap seems not much reduced. It is very difficult for agricultural regions to break the “backwash effects” circle and escape from poverty. The study also uses the case study of provinces within Southeast region to see the variation within the region, at the province level.