To become a high-income developed country by 2045, Vietnam can only achieve that goal by investing in science, technology and innovation.
|Vietnam’s economy has experienced strong growth steps since the doi moi reform.|
Continue to increase labor productivity on the basis of science and technology application
Over the past 20 years, Vietnam has always been among the top countries with high economic growth, with a rate of 6-7%. According to World Bank statistics, from 2002 to 2018, Vietnam’s per capita GDP increased by 2.7 times, reaching over $ 2,700 in 2019.
However, there are some remarkable figures when looking at the development indicators to predict the growth rate of the Vietnamese economy. That is the preliminary labor productivity of Vietnamese people in 2019 at about 110.5 million VND / employee.
The report of the Asian Productivity Organization (APO, 2019) shows that, the labor productivity of Vietnamese people in the period 2011-2018 increased by 4.8% per year on average. This number has inched up in recent years (2016-2018) with an increase of 5.7% / year.
Compared to other countries in the region, Vietnam’s labor productivity growth rate is higher than Singapore (1.42% / year), Malaysia (2% / year), Thailand (3.2% / year). , Indonesia (3.6% / year), Philippines (4.4% / year) and highest in ASEAN region.
|The gap in labor productivity per worker (in red) and per hour (in blue) by countries compared to the US. This diagram also shows the correlation of labor productivity of Vietnam with other countries in the region and around the world. Data: APO|
However, APO statistics also show that, labor productivity in terms of PPP of Vietnamese people is still very low compared to other countries in the region. On average, the labor productivity of a Vietnamese person is only 1 / 11.5 compared to Singapore, 1 / 4.5 Malaysia, 1 / 2.5 Thailand, 1/2 Indonesia, 1 / 1.6 Philippines and even only 89% of Laos.
The recent miraculous growth of Vietnam is due to its market development strategy, opening the economy to international trade, attracting foreign direct investment (FDI), and developing production platforms. and export.
But to continue to grow, Vietnam needs to move away from a development strategy based on a cheap workforce, export based on foreign invested enterprises, and shift its development focus to increasing labor productivity. In particular, productivity growth due to the application and development of science and technology will be the prerequisite for Vietnam’s economic development.
|GDP growth rate of Vietnam in the period from 1985 to 2019. Data: World Bank|
According to the project “Assessment of the innovation impact of technology in Vietnam on GDP productivity growth of economic sectors”, the results of the analysis of labor productivity of the entire economy in the period 2000-2018 show that , average output growth per worker in Vietnam is 3.3%.
There are many factors affecting labor output, such as capital intensity, labor mobility between industries, ability to absorb technology, and efforts of industry leaders in applying technology. , … In which, technology absorption factor contributed the most to growth, accounting for 1.8% of the total increase of 3.3%.
The report also stated that, over the past 20 years, if more investment is made in technology, most Vietnamese businesses can get closer to the optimal level that the most efficient firms in the economy can achieved.
Investment in science and technology: Enjoy prosperous results 5-10 years later
According to experts, the enhancement of technology capacity of enterprises is the main driver of growth in output per employee. Technology adoption is an important channel of growth. This also emphasizes the importance of policy tools to help improve the technology absorption capacity of firms in Vietnam.
However, there is a fact that investment in science and technology in Vietnam is still low. In 2017, Vietnam’s investment in research and development (R&D) accounted for only 0.5% of GDP, much lower than 1.44% in Malaysia or 0.8% in Thailand.
|The application of science and technology and digital transformation will have a strong impact on labor productivity, thereby creating a driving force for the Vietnamese economy. Photo: Trong Dat|
The low level of investment in R&D, from both the public and private sectors, is of great concern. Low investment levels coupled with investor skepticism may stem from a belief that productivity gains from technology adoption and innovation are not high. The direct and indirect effects of technology investment in Vietnam on productivity, GDP, and economic growth are still speculative.
Research by the Ministry of Science and Technology, the Vietnam Institute for Economic and Policy Studies (VEPR-VNU) and the University of Queensland (Australia) have shown that doubling investment in R&D in 1 year has could lead to an annual real GDP per capita growth of 1.8% over a 15-year period. The highest impacts will be noticed about 5 to 10 years after investing in research and development.
Capital investment in R&D will also affect consumption and wage growth, mainly due to the increase in the incomes of skilled and unskilled workers in the economy. In particular, in 15 years, an increase in investment in R&D led to an average increase of 2.51% in consumption and a 2.48% annual increase in investment for the whole economy.
In general, the application of science and technology, innovation and research and development will be the key to Vietnam’s economic growth in the next 20-25 years. On that way, technology businesses, especially ICT businesses will be important “drag drivers”, contributing to digital transformation for the whole Vietnamese economy.
Create new synergy for the country
Vietnam will continue to give priority to promoting innovation in digital technology development, implementing digital transformation in the fields of economy, society, governance …, gradually forming digital economy, digital society. , digital government, …