Pattern of Resources for Sustainable Socioeconomic Development

6:55:00 AM | 2/15/2023

All nations are endowed by nature with available resources (inputs). With their practical activities, people can use resources and act on inputs to achieve goals and make products. Product quality depends on their knowledge about the world around them that helps them determine goals and choose methods for their activities.

Indeed, the fact that every product is made from resources affirms an objective material world consisting of resources that are always present, available and moving, and changing everywhere, all the time. The issue is that countries must use their knowledge to be aware of resources and how to use them to achieve their goals.

Industrial revolutions and market economies have been created and promoted resources to achieve strong economic development, especially in developed capitalist countries. We today have a much better material life than previous generations. But two undesired consequences are now threatening everything we could wish for in the future. First, the biological foundation of our civilization is now at risk. Today's environmental, climate, and social security issues challenge the natural restorative cycle of Earth's basic life-support systems (like soil, forests, freshwater, grasslands, biodiversity and aquatic products). The second is the income gap between the rich and the poor in even the wealthiest countries in the world. For example, 10% of the richest Americans now own 70% of the net worth of the United States. An average CEO in the U.S. today earns in a day as much as that made by an average worker in a year. These two challenges place the world at the brink of a potential “non-linear” change that may lead to a global economic collapse.

In Vietnam, the history of the King Hung-formed state laid a solid foundation. Nearly 70 years ago, during a meeting with officers and soldiers of the Vanguard Army Corps at the Gieng Temple in the Hung Temple Relic Complex, before taking over Hanoi, Uncle Ho said: “Hung Kings meritoriously built our country, you and I must protect it together”. That led to the consensus on the national sovereignty of the Vietnamese army and people and established the Ho Chi Minh era of national reunification and integrity.

After half a century of restored peace, Vietnam has a rapidly developing economy. According to the International Monetary Fund (IMF), Vietnam's economy recorded over US$400 billion for the first time, ranking 37th worldwide. In the 2022 World Happiness Report (WHR) - the list of the happiest countries in the world, Vietnam ranked 77th. Moreover, with its growing economic size, soft power and widely recognized influence, Vietnam holds a steady position among the 30 most powerful countries in the world in 2022 (ranked by U.S. News & World Report).

Economies of scale and growth clearly provide citizens with better public services, security and innovative infrastructure, increased personal wealth and quality of consumption. Nevertheless, as in developing countries, economic development in Vietnam also gives rise to high social and environmental costs and is unlikely to make people truly happy or satisfied with life. Therefore, there should be more harmonization in promoting public welfare satisfaction and economic growth.

The government-initiated national master plan for 2021 - 2030, with a vision to 2050, defines Vietnam as a developed country with a GDP growth of 6.5-7.5% annually; an urbanization rate of 70-75%; and a high-ranking human development index, particularly people's well-being. National defense and security is firmly guaranteed.

To achieve sustainable development and move towards a prosperous society, Vietnam needs to identify resources by building a quantitative model and well managing the country's resources according to the selected pattern:

Positioning five primary resources (capital)

According to economists, in a market economy, capital resource is a critical element of the economy with five kinds of capital: financial, natural, produced, human and social.

All are stocks that can produce flows of economically desirable outputs to fulfill socio-economic development tasks. Financial capital in a money-for-money economy facilitates economic production, though it is not itself productive. Natural capital comprises the resources and ecosystem services of the natural world. Produced capital consists of physical assets generated by a country. Human capital refers to the productive capacities of an individual, both inherited and acquired through education and training. Social capital refers to institutions that help maintain and develop human capital in a mutual partnership. If a social activity provides any potential added value or cost reduction, it can be considered a source of social capital.

Effective administration of resources

Effective resource management means developing and implementing good planning to enhance five capital assets, rather than depleting or degrading them. Should these also be core contents of plans, strategies and visions in national master plans of the Government, localities and even the business community to realize socio-economic development goals consistently and realistically?

The five resources must be linked and managed synchronously in developing the market economy. Socioeconomic goals can be successfully achieved with resources, often with only one optimal solution. The Government must operate the machine of five sustainable socioeconomic resources to create desired flows of goods and services by using capital resources without depleting them. However, given the characteristics of Vietnam's economy, it is necessary to note four contents in implementing this model with each resource:

First, with financial resources, it is necessary to determine the actual size of the national economy in international relations. It is important to have flexible fiscal and monetary policies to manage the macro economy. In addition, it is necessary to have an appropriate market mechanism to accurately price capital sources in order to achieve maximal exploitation and limit resource waste, as non-market policies create monopolies that lead to corruption, insider speculation and unfair competition.

Second, produced capital can be considered a fundamental resource of a sustainable development economy. It is necessary to have a policy to promote and develop core "made in Vietnam" products in nationally strategic production industries to ensure a solid foundation for the economy and national security and defense.

Third, with natural resources, with land being the most extensive resource, given the different characteristics of ownership in Vietnam, it is necessary to ensure a master plan and land law with an insightful, thorough and consistent vision, domestically and internationally. It is important to have rules to define clear and transparent responsibilities and governance at all levels of communes, wards, districts, provinces and central government. Above all, there must be regular and continuous monitoring and review to avoid local and group interests.

Fourth, social capital comes from the scale of political-economic institutions, legal environment, business, culture, education, civil society and family. The social and human capital relationship is very powerful. Humans are social by nature. We have evolved to be social, which is the defining characteristic of being human. With the 13th largest population in the world, Vietnam can have substantial social and human capital once properly managed and maximized. Digital technology can provide invaluable support to policymakers. In addition, it is necessary to realize that human capital is a resource that is different from the other four capitals because its strength depends on its motivation and only this capital has the quality of innovation and creativity. If nurtured in a fair and healthy family, training and social environment, this resource will become a strong motivation with the belief and solidarity of the whole people with a common purpose to create synergy for social development. Along with the clear positioning of the country's material strength, it is also necessary to change human consciousness in this field. If so, the national economy can make a development breakthrough as the innovative and creative qualities of people are often the result of freedom and equality and the source of prosperity. Therefore, to manage social capital well, it is first necessary to build a political and social institution and structure to ensure human capital development. Socio-political organizations should be built with the rule of law and ensure democratic centralism. According to the Document of the 13th National Party Congress that states “...Continue to reform the organization and operation of the Government towards leanness, effectiveness and efficiency”, the Government apparatus from central to local levels should be streamlined with focused good governance of the five-resource model for socioeconomic development and environment and effectively linked combination of six spatial regions (Northern Midlands, Northern Mountains, Red River Delta, Central Highlands, Southeast and Mekong Delta). Plans, tasks and solutions of Party and Government resolutions should also be developed to ensure consistency and efficiency in perception, implementation, supervision and inspection, as well as theories built about economic outcomes.

The Communist Party of Vietnam determines that one of the critical tasks of the 13th National Party Congress is "Arousing aspirations for developing a prosperous and happy country...” To realize this task, the objective rule of “every product must be made from resources” is even of more practical significance. In that process, awareness, initiative and comprehensive governance of the five-capital model will bring the country with the pentagram symbol into the top 20 economies by its centenary founding anniversary.

Dr. Doan Duy Khuong

Source: Vietnam Business Forum