Science and technology plays an extremely important role in economic development of every country. As a later-developing country, Vietnam has obvious advantages in exploiting its technological gap with the world to accelerate its progress to the world level. This is known as the advantage of backwardness, Dr Vu Minh Khuong from National University of Singapore said at the workshop on “Defining scientific and technological contributions to Vietnam’s economic growth.” Vietnam Business Forum interviewed Mr Vu Minh Khuong on this issue. Do Ngoc reports.
You have mentioned a principle that one of advantages for a late-developing country is the so-called 'advantage of backwardness'. So, how has Vietnam exploited this advantage?
The advantage of backwardness principle was mentioned by Gerschenkron in 1962. He said that the more backward a place is, the more it can learn.
Later-developing countries can exploit their technological gaps with the world to speed up their progress and the more technologically backward they are, the more gains they are likely to achieve with this endeavour. If you are poor, you will have a treasure of golden knowledge to learn. Vietnam has done quite a lot in the current era although they lack major breakthroughs. As a laggard, Vietnam can learn a lot from the experience of developed countries to avoid investment mistakes. However, Vietnam is today leveraging its advantages but it is going on a slightly unbalanced way because of excessive use of the cheap labour advantage. For example, employers now very much prefer paying US$150 (a month) for workers aged 18 with very quick assembling skills and very sharp eyes. But, after two decades when these workers are much older, it is a question about their likelihood of being paid twice as much. In theory, the pay is doubled after every 10 years. The key to this matter is raising labour productivity. For example, Samsung Bac Ninh needs to enhance labour quality, its workers must work in the day time and learn at the night time to raise their skills instead of resting and entertaining. In such case, wages are increased according to working levels. Investors like Samsung or Microsoft are willing to make investment for that. Pay increases because of labour quality, not supply shortages.
You have mentioned the miracle of science and technology - the dynamics of economic development. Would you mind talking more about this issue?
In Asia, South Korea, which is dubbed the "Dragon of Asia", had phenomenal growth in a short time period by applying science and technology to enhance labour productivity. 50 years ago, South Korea was poorer than Bolivia and Mozambique, but it is now richer than New Zealand and Spain, with GDP per capita reaching US$23,000 in 2014. The annualised economic growth averaged 7 percent in the past 50 years.
One of motivations for South Korea's phenomenal economic growth is investing in research and development (R&D), urging businesses to advance innovation and apply science and technology to production. From its heavy dependence on foreign technologies, South Korea has gradually exported its technological products and applied science and technology to enhance labour productivity - a key element of economic growth.
Like South Korea, in the early 1960s, Singapore was poor and lacked natural resources and its population was small and unemployed. But after just 40 years, this country has developed very rapidly. Notably, one important experience in its rapid and sustainable economic growth is focusing on training workers in science and technology. In 1969, the Singaporean Ministry of Education announced that all secondary students of the country had to have two years of compulsory technological education. Since then, its workers had higher working skills thanks to better knowledge of science and technology and their adaptability to advanced working environments. From this experience, Vietnam can identify its key to economic development and invest for human resources in the right way for development.
How have companies invested in science and technology?
I need more studies and assessments to this effect. But, I have found that some companies have robust investments for scientific and technological development, like Vinamilk.
Before introducing investment policies for science and technology, applicable to private enterprises, the government needs to have specific initiatives. Or in other words, they need to gather businesses to have good opinions to draft policies.
The Government of Singapore usually listens to reports from experts to learn about global trends before it works with businesses to learn about practical needs. Then, it is able to create effective policies.
The Ministry of Science and Technology recently set up venture capital funds and soft loan funds for businesses. Do you think these funds will provide momentum for companies to pay more attention to applying science and technology to operations?
In Vietnam, I see the impulse for innovation and applications of science and technology, but it lacks practical application. The agreement between the Government and enterprises is not really deep.
Perhaps, Vietnam now does not need venture capital funds as much as labour productivity improvement. In Singapore, given US$1-2 billion of investment capital, labour productivity will increase immediately.
Venture investment capital in a completely new field in Vietnam is not necessary when it lacks capital in general. Therefore, it is essential to have the absolute support and agreement from businesses to succeed in scientific and technological investments.
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