New roadmap for Viet Nam to create a more integrated, transparent and sustainable economy
Viet Nam’s economic success offers an opportunity to engage in the bold reforms necessary to stay on the path towards a high-income economy, according to the country’s first Multi-Dimensional Review (MDR).
Since the launch of the Ðổi Mới economic reforms in 1986, Viet Nam has achieved immense economic and social progress. Its remarkable containment of Covid-19 will support a return to the growth it had enjoyed prior to the crisis, on the back of deep integration in the global economy and a strong focus on human capital. Viet Nam has also achieved remarkable human development, poverty reduction and improvements in living standards, and has actively participated in international efforts to tackle the risks of climate change.
The report however warns that, without a dedicated push for a more integrated economy with equal opportunities for all firms and workers, Viet Nam might struggle with a dualistic economic structure typical of the middle-income trap – referring to economies that experience rapid growth and thus quickly reach middle-income status, but then fail to overcome that income range to further catch up with the richest economies.
The Review also highlights that the country’s social security system has to adapt in the face of rapid population ageing. Viet Nam needs a stronger and better integrated domestic market to reap the benefits of growing automation in manufacturing and compensate for rising international trade tensions. It needs to attract foreign investment that can create linkages between domestic firms and global supply chains.
Adopting international best practices with respect to the corporate governance of State-owned enterprises (SOEs) can help level the playing field so that all firms have equal chances of success. Property rights need to be secured in order to facilitate the emergence of effective land markets, leading to higher productivity in the agricultural sector and more sustainable forms of land use.
Viet Nam’s tertiary education system could play a more important role in ensuring that workers and entrepreneurs have the right skills to develop or absorb innovative methods of production. Schools have acquired more autonomy and responsibilities, but co-ordination and peer-to-peer support are necessary to make the most of this new environment. Viet Nam also needs to develop a strong information system to support evidence-based policy-making and guide students’ choices.
Environmental pressures are also increasing: the annual mean concentration of fine particles in the air continues to rise and water quality is deteriorating. A lot has already been done to promote renewable sources of energy but fast growing needs make the transition away from carbon-intensive energy sources particularly urgent.
The Multi-Dimensional Review of Viet Nam proposes seven strategic goals to create a more integrated, transparent and sustainable economy, while strengthening financing for the future, and improving governance and regulatory capabilities:
- Create new opportunities in agriculture, manufacturing and services
- Enhance SOEs’ efficiency, which could bring the country about 2.5% of GDP annually in efficiency gains
- Build a strong skills system
- Ensure sustainability through better environmental and energy management
- Enhance the inclusivity of Viet Nam’s social system
- Improve the country’s financing capacity
- Strengthen Viet Nam’s capabilities for implementation
In order to achieve these goals, the report provides 27 recommendations and 70 concrete actions. The Multi-dimensional Review supports Viet Nam in the preparation of its 2021-2030 Socio-Economic Development Strategy.
For more information, journalists are invited to contact Bochra Kriout at the OECD Development Centre Press Office ( Tel: +33 (0)1 45 24 82 96).