Science and Technology: Key to Growth

Countries that exploit science and technology better achieve strong growth and become leading economies in the region and in the world, said Deputy Minister of Science and Technology Tran Quoc Khanh at a workshop on scientific and technological contributions to Vietnam’s economic growth, held by the Vietnam Productivity Institute and the Directorate for Standards, Metrology and Quality under the Ministry of Science and Technology.

 

According to the World Bank’s analysis report based on 38 countries and regions in the world, technological progress contributed 50 per cent to economic growth in developed countries and over 30 per cent in developing countries. In South Korea, scientific and technological breakthroughs pushed up its socioeconomic growth and brought income per capita from US$1,040 in 1977 to US$3,360 only 10 years later. Its investment for science and technology increased from US$378 million to US$5 billion, or 13 times more. In China, the increase of investment for science and technology from 0.6 per cent of GDP in 2001 to 1.43 per cent in 2007 pushed up its GDP per capita from US$1,047 to US$2,604 in the period. In recent years, rice, seafood, pepper, coffee and rubber are always key exports of Vietnam. And, this fruit comes from significant scientific and technological contributions. Thousands of new varieties and production processes have been brought from laboratories to fields.

 

Dr Vu Minh Khuong from the National University of Singapore said science and technology have immensely important contributions to each country’s economic development and this is very easy to be seen by people. For example, to test water source, Singapore installs chips at the upper source which will send data to monitoring centres. Hence, experts will know water quality by looking at data on computers sent from water meters. They will immediately know infected areas and apply suitable solutions. “We must inspire the entire society to move forward. What the world is doing, Vietnam will try to do so,” he said. Vietnam needs to apply technology to enhance labour productivity. The longer we are left behind (more technologically backward), we will find it easier to make success. If we are poor, we will have a knowledge treasure to fill it up. Vietnam has done a lot but there are no breakthroughs,” said Khuong.

The 11^th Party Congress and the draft document of the 12^th Party Congress set TFP targets and related indicators until 2015 and to 2020, based on data of the General Statistics Office (GSO). GSO said TFP’s contributions to Vietnam's GDP growth was more than 28 per cent in the 2011 - 2015 period. TFP’s contribution to economic growth tend to be on the rise in recent years, indicating that input factors - capital and labour - of our nation are used more effectively to create outputs.

 

Vietnam's economic development is typically extensive. GDP growth extensively depends on capital, account for more than three-fourths. TFP - an indicator of quality - contributes only a quarter. Although the target of TFP’s contributions to Vietnam’s GDP growth to 2015 and to 2020 are not high (still far lower than South Korea), it is not easy to reach for Vietnam.

 

Mr Tran Anh Tuan, Director of Vietnam Productivity Institute, companies tend to extend the time of depreciation on fears of higher costs, even cut by a half of the above figure. However, if technological innovation and equipment upgrading are not sped up as planned, our equipment and technological level will be more backward, thus reducing our competitiveness. According to surveys in 2,000 companies in seven key industries by the Vietnam Productivity Institute, companies have better results with better technology, equipment, research and development, and application of advanced governance methods.

 

Economic expert Pham Chi Lan said TFP is the most important among economic growth factors. And, the key element is labour productivity as the Government of Vietnam has defined for years. However, for a long time, we excessively focus on attracting foreign direct investment and making light of human factors. To have sustainable development, Vietnam must define key economic sectors and it impossible that all economic sectors are key.

 

TFP illustrates economic efficiency and sustainability. Therefore, restructuring the economy, changing growth model, and seeking solutions to improve contribution of TFP to GDP in the end are also for this purpose.