Vietnam must change economic model to achieve high-income (WB) status

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For Vietnam to achieve its aspiration of reaching high income status by 2045, it will need to change its economic growth model and significantly improve the government’s ability to coordinate and implement economic policy reforms and public investments, according to a report by the World Bank Group (WB).

Vietnam’s traditional growth model faces major challenges from Covid-19 pandemic, slowing globalization, and the country’s growing vulnerability to external shocks, particularly climate-related risks, according to the World Bank Group’s Systematic Country Diagnostic Update, “How Will Vietnam Thrive?” “Reform institutions for effective implementation”.

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

For Vietnam to achieve its aspiration of reaching high income status by 2045, it will need to change its economic growth model and significantly improve the government’s ability to coordinate and implement economic policy reforms and public investment. , according to a World Bank (WB) report. Its growth model faces the challenges of COVID-19 and slowing globalization.

“Vietnam’s GDP per capita has quintupled over the past three decades, while its institutions have not adapted at the same speed since the Doi Moi of the late 1980s,” said World Bank Country Director for Vietnam Carolyn Turk. “A series of institutional reforms can help the country avoid the middle-income trap by increasing its efficiency in responding to new and complex global and national challenges.”

Vietnam has implemented its development priorities unevenly over the past 35 years. It exceeded expectations in terms of trade openness and social inclusion, but fell significantly behind in promoting green growth and modernizing basic national infrastructure. This variability is explained by its institutions which have not always been well prepared to respond to increasingly complex, often cross-cutting development priorities, or to facilitate the transition to a higher-income society. The adaptation and modernization of existing institutions is a key priority of the socio-economic development strategy adopted by the Party Congress in February 2021.

Improving Vietnam’s enforcement performance will require five institutional reforms, according to the report. Vietnam will need to create a solid institutional anchor that will transform development priorities into concrete actions; streamlining administrative processes to increase government efficiency at all levels; use market-based instruments to motivate public and private actors; apply rules and regulations to build motivation, trust and fairness; and engage in participatory processes to ensure greater transparency and accountability.

Thanks to this series of five institutional reforms, Vietnam has already moved from one of the most closed economies in the world to one of the most open economies during the 1990s and 2000s. But the transition from lower middle income to high will be much more difficult. By adopting these institutional reforms more systematically, Vietnam will strengthen its vision of economic development, strengthen its ability to implement national strategies and strengthen its motivation to deliver results in several key areas – green growth, digital transformation, financial inclusion, protection social and infrastructure. upgrade – which will help him achieve his development goals.

Fibre2Fashion (KD) News Desk

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