Hanoi (VNA) - ForVietnam to realise its aspiration for reaching high income status by 2045, thecountry will need to shift its economic growth model and sharply improve thegovernment’s capacity to coordinate and implement economic policy reforms andpublic investments, a World Bank Group report says.

The World Bank Group’s Systematic Country Diagnostic Update,entitled "How WillVietnam Blossom? Reforming Institutions for Effective Implementation”, emphasisesthat Vietnam's traditional growth model faces major challenges from the COVID-19pandemic, slowing globalisation, and the country’s increasing vulnerability toexternal shocks, especially climate risks.

After identifying a series of policy responses and reformpriorities, many of which are not new, the report argues that adaptinginstitutions will be the key to success.

Vietnam’s GDP percapita has increased five fold over the past three decades, while itsinstitutions have not adapted at the same speed since the Doi Moi (Renewal) ofthe late 1980s,” said WorldBank Country Director for Vietnam Carolyn Turk. 

“A series ofinstitutional reforms can help the country avoid the middle-income trap byincreasing its efficiency to respond to new and complex global and domesticchallenges,” stated Turk.

Vietnam has implemented its development priorities unevenlyover the past 35 years. It has exceeded expectations in trade openness andsocial inclusion but lagged considerably in promoting green growth andupgrading national core infrastructure. Such variability is explained by itsinstitutions that have not been always well prepared to address increasinglycomplex, often cross-cutting development priorities, or to facilitate thetransition to a higher-income society. Adapting and modernising existinginstitutions is a key priority of the socio-economic development strategyadopted by the Party Congress in February 2021.

Improving Vietnam’s implementation performance will requirefive institutional reforms, the report says. Vietnam will need to create asolid institutional anchor that will transform development priorities intoconcrete actions; streamline administrative processes to increase theeffectiveness of government at all levels; use market-based instruments tomotivate public and private stakeholders; enforce rules and regulations toenhance motivation, trust, and fairness; and engage in participatory processesto secure greater transparency and accountability.

Vietnam has already transformed itself from one of the most closed economies in theworld to one of the most open economies during the 1990s and 2000s. But theroad from lower middle income to high income will be far more challenging. Byadopting these institutional reforms more systematically, Vietnam will underpinits vision for economic development, strengthen its capacity to implementnational strategies, and boost its motivation to produce results in several keyareas – green growth, digital transformation, financial inclusion, socialprotection and infrastructure upgrading – that will help it achieve itsdevelopment goals./.