Vietnam Needs More "4.0 Innovation" Models
"Vietnam should make a strategic shift towards a more productivity and innovation-based economy while making the most of the ongoing demographic dividend to sustain high-quality growth over the next decade."
This is one recommendation stated in a joint report by the World Bank and the Vietnam Academy of Social Sciences on a new economic growth model in the period of 2021-2030.
Prepared with support from the Australian Government, the report proposes Vietnam’s new economic model in 2021-2030 center around three breakthroughs: innovation and entrepreneurship, human capital, and modern institutions.
Research shows that the labor-intensive, export-based growth model that Vietnam has pursued in 2011-2020 has become obsolete.
Experts said that if Vietnam wants to avoid the middle-income trap, it must maintain an annual growth rate of 7.0 to 7.5% in the 2021-2030 period, higher than the average 6.3% in the last 10 years.
Research report proposed a new economic model for Vietnam in the period 2021-2030 focusing on three breakthrough areas: innovation and entrepreneurship; human capital; and modern institutions.
According to Mr. Ousmane Dione, World Bank Country Director for Vietnam, the achievements that Vietnam has obtained today are a noticeable result from the first Doi Moi (renovation) in 1986, as well as a series of the next strong market reform measures. Today, Vietnam needs an additional Doi Moi to achieve its desire to become a modern, high-income country by 2045.
“We are living in an era of disruptive technologies, which present both challenges as well as opportunities. I would call it ‘Doi Moi 4.0’.”
The adjustment and change of growth model is urgent if Vietnam wishes to become a middle-income country by 2030 and a high-income country by 2045. To achieve this, Mr. Ousmane Dione said that the economy needs to operate effectively and sustainably over the next 25 years, the average growth must be at least equal to that of the last 30 years. And this goal must be achieved in a challenging context.
In the country, Vietnam is facing increasing structural obstacles, including the rapidly aging population, the impact of decreasing factor accumulation, as well as the growing environmental costs in the development process. Vietnam will have to choose its direction in a changing world context, the changes in global trade and investment models will be less favorable for export-based growth and revolution. Industry 4.0 creates both of opportunities and new risks.
“To mitigate these risks and seize these opportunities, Vietnam needs to accelerate reforms that boost productivity and innovation as key drivers of growth in the coming decade, including steps to remove bottlenecks in private sector investment, enhance public sector institutions, and invest in 21st century workplace skills,” said Mr. Ousmane Dione. In order to increase productivity, it is necessary to drastically improve all quality aspects of growth, including efficient resource allocation, improving the quality of human capital, increasing effective investment in infrastructure and providing services, as well as innovations to all yield results that increase productivity. For the final aspect, international experience shows that effective innovation requires an open and reasonable roadmap for reforms, and that countries at different stages of development have different approaches to innovation.
For Vietnam today, creating a favorable business environment and promoting innovation will bring higher efficiency than those controlled by popular supply such as increasing spending for research and development or focus on invention and patent activities.
The next problem is implementation. Mr. Ousmane Dione highlighted that the challenges of Vietnam's current development process are much more complicated than the last 30 years. Part of this complexity stems from the fact that development issues are becoming more and more multidisciplinary. Poverty reduction not only requires improving economic life, but also improves basic services and develops human capital. Similarly, the development of human capital is not only about education, but also about health care throughout the life cycle of the people as well as the care of the elderly and social protection. The nature of interdisciplinary development and private sector development is also multidisciplinary. To solve these complex problems, strong leadership and determination are needed. At the same time, it is necessary to have an effective and developed governance system, ensuring smooth and horizontal coordination between ministries in the government and vertically among the authorities from central to local levels.
Continuing strong institutional reforms to address fundamental weaknesses related to how governments provide services to businesses and people will be the key to successful implementation of these strategies, Mr. Ousmane Dione added.
Anh Mai
Vietnamese
October 2024
Hanoi
