Econ
Vietnam needs to accelerate “Doi Moi” to boost productivity and innovation
Vietnam’s journey to become a high-income economy has just begun.
Vietnam needs to accelerate “Doi Moi” (reforms) that boost productivity and innovation as key drivers of growth in the coming decade, said Ousmane Dione, country director for the World Bank (WB) in Vietnam at the workshop on Vietnam Economic Growth Model for 2021-30, with a vision to 2045.
Ousmane Dione emphasized that strong economic growth is perhaps one of the most important pre-conditions for development success. Since “Doi Moi” took place in the late 1980s, Vietnam economic growth has been remarkable, the economy has expanded at an average of nearly seven percent annually. As a result, per capita income has increased almost fivefold. Vietnam today has emerged as a thriving lower middle-income economy and export powerhouse. Growth has also been inclusive, with poverty falling of just below seven percent, compared to more than sixty percent in the late 1980s.
However, Vietnam’s journey to become a high-income economy has just begun. In this new journey, what has been working in the past 30 years may not necessarily work in the future. The impacts of initial institutional and structural reforms seem to have reached their limit. Adjustments and changes to the growth model are urgently needed if Vietnam aspires to become a successful upper middle-income country by 2030 and a high-income country by 2045, the country director said.
He added that achieving this aspiration would require a strong and sustained performance over the course of more than 25 years, at least at the average rate of growth in the past 30 years. In addition, this target must be achieved in a challenging context.
Domestically, Vietnam is facing rising structural headwinds, including a rapidly aging population, declining impact of factor accumulation, as well as an increasing environmental toll on development.
Globally, Vietnam will have to navigate a changing terrain where shifting global trade and investment patterns seem to be less favorable for export-led growth and the Industrial Revolution 4.0 is reshaping opportunities and creating new risks.
Ousmane Dione highlighted two factors that are key for Vietnam’s future successes, regardless of the growth model that it will adopt.
First, quality. Preliminary simulations indicate that Vietnam needs to move to a productivity-led growth, with substantial increase in the average growth rate of productivity, an achievement that has been attained by only a few countries to date. He believes that Vietnam can still enjoy significant gains from technology transfers and adoption, and firms should be placed at center in the innovation agenda.
Second, implementation. Vietnam’s development challenges today are far more complex than the past 30 years. Continued strong institutional reforms that tackle the fundamental weaknesses relating to how the government provides services to businesses and citizens would be key to successful implementation of the strategies that we discuss today.
The achievements that Vietnam has today are the tangible results of initial “Doi Moi” in 1986 as well as a series of bold market reforms that followed. Vietnam needs another “Doi Moi” today to achieve its aspiration for becoming a modern, high-income country by 2045. Living in the era of disruptive technologies that presents both challenges as well as opportunities, I would like to call it “Doi Moi 4.0”, Ousmane Dione stressed.
He noted that the WB Group has been privileged to accompany Vietnam throughout the country’s remarkable development over the past 30 years. But development will not stop at any arbitrary income level – every country is a developing country.
“We are excited to continue the strong and trusted partnership with Vietnam in the years to come, through comprehensive support, knowledge and financing, to address increasingly difficult development challenges. Vietnam’s successes are our successes, and together we can do it,” Ousmane Dione expressed.
Ousmane Dione emphasized that strong economic growth is perhaps one of the most important pre-conditions for development success. Since “Doi Moi” took place in the late 1980s, Vietnam economic growth has been remarkable, the economy has expanded at an average of nearly seven percent annually. As a result, per capita income has increased almost fivefold. Vietnam today has emerged as a thriving lower middle-income economy and export powerhouse. Growth has also been inclusive, with poverty falling of just below seven percent, compared to more than sixty percent in the late 1980s.
Overview of the workshop. Photo: WB
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He added that achieving this aspiration would require a strong and sustained performance over the course of more than 25 years, at least at the average rate of growth in the past 30 years. In addition, this target must be achieved in a challenging context.
Domestically, Vietnam is facing rising structural headwinds, including a rapidly aging population, declining impact of factor accumulation, as well as an increasing environmental toll on development.
Globally, Vietnam will have to navigate a changing terrain where shifting global trade and investment patterns seem to be less favorable for export-led growth and the Industrial Revolution 4.0 is reshaping opportunities and creating new risks.
Ousmane Dione highlighted two factors that are key for Vietnam’s future successes, regardless of the growth model that it will adopt.
First, quality. Preliminary simulations indicate that Vietnam needs to move to a productivity-led growth, with substantial increase in the average growth rate of productivity, an achievement that has been attained by only a few countries to date. He believes that Vietnam can still enjoy significant gains from technology transfers and adoption, and firms should be placed at center in the innovation agenda.
Second, implementation. Vietnam’s development challenges today are far more complex than the past 30 years. Continued strong institutional reforms that tackle the fundamental weaknesses relating to how the government provides services to businesses and citizens would be key to successful implementation of the strategies that we discuss today.
The achievements that Vietnam has today are the tangible results of initial “Doi Moi” in 1986 as well as a series of bold market reforms that followed. Vietnam needs another “Doi Moi” today to achieve its aspiration for becoming a modern, high-income country by 2045. Living in the era of disruptive technologies that presents both challenges as well as opportunities, I would like to call it “Doi Moi 4.0”, Ousmane Dione stressed.
He noted that the WB Group has been privileged to accompany Vietnam throughout the country’s remarkable development over the past 30 years. But development will not stop at any arbitrary income level – every country is a developing country.
“We are excited to continue the strong and trusted partnership with Vietnam in the years to come, through comprehensive support, knowledge and financing, to address increasingly difficult development challenges. Vietnam’s successes are our successes, and together we can do it,” Ousmane Dione expressed.
