Not yet escaped horizontal growth

Over the past two decades, Vietnam's annual GDP growth rate has been basically quite positive (except for the relatively low growth in 2020-2021 due to the impact of the Covid-19 pandemic), although it is still below the target and average growth expectations when considering each 5-year period. In 2024 alone, many factors show that growth could be close to 7% (ie it could exceed the upper limit in the target set for this year). However, experts believe that growth quality is still a matter of concern when the growth model has not created fundamental changes, labor productivity, efficiency and competitiveness of the economy are not high.

According to Associate Professor, Dr. Bui Quang Tuan - former Director of the Vietnam Economic Institute, when looking at the economic drivers and structures, it still shows that we have not escaped the extensive growth model (growth based on resources, land and cheap labor). In terms of drivers, currently the contribution of financial resources and human resources accounts for a large proportion and still tends to increase, while the contribution of total factor productivity (TFP) and the contribution of labor to GDP growth accounts for a small proportion and tends to decrease over time. Therefore, investment is still the main factor driving economic growth and economic growth is driven by capital factors rather than accumulation of labor input factors.

Labor productivity has improved, but remains quite low.

In other words, the growth model still relies on cheap labor, there is a dual economy (foreign and domestic), the spillover of the foreign-invested sector is still limited, especially in technological capacity. Meanwhile, the contribution of science, technology and innovation to growth is still small. Although labor productivity has improved, it is not much... In addition, green growth has not been realized much; the circular economy is just emerging and has not developed; the blue ocean economy is still mainly in the form of potential... "Such factors show that the growth model is still old-fashioned, not yet free from the model of growth in breadth", Associate Professor, Dr. Bui Quang Tuan commented.

The 10-year socio-economic development strategy for 2021 - 2030 sets out the general goal: By 2030, Vietnam will strive to become a developing country with modern industry and high average income... By 2045, it will become a developed country with high income. According to experts, achieving the above goals is very challenging and there is not much time left. Dr. Vo Tri Thanh - former Deputy Director of the Central Institute for Economic Management Research said that the issue of transforming the growth model has been raised for more than 10 years, but the overall picture of the growth model remains the same, there has been change but no breakthrough. Why is that?, this expert asked, and at the same time said that if that question cannot be answered thoroughly, the goals and aspirations set, in the immediate future until 2030 (only 6 years left), and further until 2045 will be very difficult to achieve.

Realize your dream

Although there are still challenges and difficulties in transforming the growth model, experts believe that the current context also has many favorable conditions for promotion. According to Associate Professor, Dr. Bui Quang Tuan, the trend of new technology, green development and digitalization has become objective; the innovation movement; the development of the start-up movement; the young population structure, access to good technology; smarter production, distribution, and consumption; the economic potential, position, and prestige of Vietnam are increasingly improving; the advantages of being a latecomer... are good opportunities for transforming the growth model.

Experts suggest that we should continue to focus on implementing three strategic breakthroughs: Infrastructure; Human resources for science and technology; Institutions and markets. In particular, we need to promote innovation, digital transformation and green transformation of the economy. “There must be breakthroughs through innovation, the more innovative and drastic the implementation, the higher the quality of growth, faster and more sustainable development. At the same time, we need to maximize the human factor, considering people as the center, subject, most important resource and goal of development”, Associate Professor, Dr. Bui Quang Tuan emphasized.

Along with that, it is necessary to continue reforming, perfecting, improving institutional quality and improving law enforcement capacity along with mobilizing and effectively using resources, especially investing in science and technology and innovation. Investing in infrastructure including digital infrastructure, digital platforms, digital applications such as AI, blockchain... to create Vietnamese branded digital products. Having mechanisms to encourage investment in science and technology and R&D in enterprises. Sharing and connecting databases and digital resources, applying in governance and operation. In addition, focusing on sustainable development, reducing greenhouse gas emissions, responding to climate change; promoting regional linkages, chain linkages, industry clusters, balanced development between regions and reducing social inequality.

“The time pressure is huge and unprecedented if we really want to narrow the gap, really want to keep up with the times or want to have areas that can get ahead,” Dr. Vo Tri Thanh emphasized and said that the challenges, obstacles as well as opportunities have all been identified, the problem lies mainly in the initiatives to solve (including the creativity and adaptation of the business community in the current context), the support (accompanying) of policy institutions and the level of determination in action.

This expert also acknowledged that digital transformation, green transformation, and innovation are golden opportunities but can also be considered the last chance for Vietnam to join and catch up with the world. Because in this 4.0 industrial revolution, there are many types and fields open for Vietnam to choose from; suitable for the capacity and culture of Vietnamese people. Therefore, to avoid the risk of falling behind, Vietnam needs to be proactive, not wait to be able to catch up with the world. "With such time pressure, Vietnam now has to "learn while doing"; "work while running" to be able to achieve the set goals", said Dr. Thanh.