Hanoi (VNA) – A shift to a growth model based on science, technology, and innovation is critical for Vietnam’s sustainable and high-quality growth, analysed experts at a recent international conference on drivers of Vietnam's economic growth in the new era.

Dr. Le Xuan Sang, Deputy Director of the Institute of Vietnam and World Economy, noted that the country's growth has been largely driven by capital, low-cost labour, and foreign direct investment (FDI) while total factor productivity (TFP) contributes less.

From 2001 to 2023, the TFP’s role diminished, indicating that growth has not been truly powered by innovation or technological advancements. The economic vulnerabilities exposed by the pandemic, geopolitical conflicts, and climate change further highlight weaknesses in governance, financial market efficiency, and FDI firms' connectivity with domestic businesses, he said.

Sang proposed five key strategies to improve the country’s growth model – ensuring macroeconomic stability and preparing for shocks; reforming government and promoting transparency and accountability; enhancing the efficiency of capital, stock, and real estate markets; fostering linkages between FDI and domestic enterprises, and developing renewable industry; and improving social trust, social capital, and workforce quality.

Meanwhile, Dr. Nguyen Quynh Trang from the University of Economics under the Vietnam National University, Hanoi, observed that Vietnam’s GDP growth in recent years faces great pressure from global downturns and trade tensions. Domestically, household consumption shows sluggish recovery post-pandemic, private investment is constrained by high capital costs, and public investment disbursement has fallen short of expectations. Long-term growth is hampered by weak production capacity, inadequate infrastructure, and low labour productivity and TFP.

She cautioned that without quick improvements in investment and human resources quality, Vietnam risks falling behind when the Fourth Industrial Revolution and green transition become standards for global development.

Trang recommended domestic consumption be spurred through tax relief and credit policies, expediting public investment disbursement for multiplier effects, supporting exporters with financing, logistics and trade promotion, and improving workforce quality via vocational training, digital skills, and high-tech education.

She also highlighted the need for strategic infrastructure development, from transportation, logistics and clean energy to digital infrastructure, to enhance national competitiveness. Lowering logistics costs, ensuring energy stability, and expanding digital infrastructure will help emerging sectors thrive.

Dr. Dang Hai Anh, a World Bank expert, emphasised the importance of social safety nets for long-term growth. While Vietnam has made strides in near-universal health insurance coverage, access to social and unemployment insurance remains uneven among regions and income groups. The informal workforce, a large part of the labour market, still has low productivity and are vulnerable to changes.

Without expanding and improving the social safety net, Vietnam's economy could face the risk of instability, particularly amid rapid population aging, Anh warned.

The expert argued that social welfare policies should not only serve as a safety net but also drive growth. Expanding insurance coverage, increasing vocational training, and aligning labour standards with international norms will raise productivity, better working conditions, and reduce inequality – key steps for fostering inclusive growth, strengthening social cohesion, ensuring macroeconomic stability, and attracting long-term investment.

💝 Given Vietnam’s aging population, Anh suggested redesigning pension, unemployment insurance, and social assistance policies to support both formal and informal workers. He recommended creating flexible and voluntary insurance schemes backed by the state budget to expand coverage and reduce burden on the budget in the long term./.