Lê Quốc Minh, Nhân Dân Newspaper Editor-in-Chief, speaks at the conference. Photo nhandan.org

HÀ NỘI — Việt Nam must move beyond a growth model heavily reliant on investment, low-cost labour and foreign-invested production if it is to become a high-income economy by the middle of the century, economists said at a national conference in Hà Nội on Thursday.

The national scientific conference, entitled “Renewing Việt Nam’s development model to meet the requirements of the new era”, was jointly organised on Wednesday by the National Economics University, Nhân Dân Newspaper, the Communist Review and the University of Economics HCM City.

It brought together nearly 300 delegates, including representatives of Party and State agencies, the National Assembly, Government, central ministries and sectors, as well as economists, researchers and representatives of universities, research institutes and businesses.

Moving beyond traditional growth drivers

Lê Quốc Minh, Editor-in-Chief of Nhân Dân Newspaper, emphasised the significance of taking a clear-eyed view of Việt Nam’s existing development model after four decades of Đổi mới, or Renewal.

Over that period, Việt Nam has integrated more deeply into the global economy, significantly improved living standards and strengthened its international standing and reputation.

Those achievements, however, should not obscure the limitations of the current model or the bottlenecks that must be addressed, Minh said.

“The next stage requires a decisive shift towards better growth quality, more efficient use of resources and new sources of momentum,” he said.

“Growth must move away from dependence on capital, natural resources and labour and become increasingly driven by productivity, knowledge, science and technology, innovation and a highly skilled workforce.

“Việt Nam must also move from simply participating in value chains to securing a higher position in global value chains, from receiving technology to mastering and creating it, and from competing on cost to competing on productivity and capability.”

Minh said participants should examine how Việt Nam could renew its development model in line with Resolution 19-NQ/TW, issued by the Party Central Committee on July 28, 2026, following directions set at the third plenum of its 14th tenure.

“The ultimate purpose of development is not simply to achieve a higher GDP figure, but to improve people’s quality of life and enhance the country’s overall strength, based on the self-reliance of both the nation and its people, as reflected in Resolution 19,” Minh said.

“A new development model must therefore manage the relationship between the speed and quality of growth, economic efficiency and social progress, equality and environmental protection, deeper integration and greater economic autonomy, as well as socio-economic development and the consolidation of national defence and security.

“Cultural values, human resources and social stability must become internal sources of strength for national development.”

Growth becoming less productive

Prof Dr Ngô Thắng Lợi, a senior lecturer at the National Economics University, identified slowing growth and diminishing returns from traditional economic drivers as major constraints.

“ Việt Nam’s growth rate has gradually declined across four development periods, indicating that the existing model would not be sufficient to deliver rapid and sustainable growth in the years ahead,” Lợi said.

He went on to say that economic expansion remained heavily dependent on investment, with capital growth continuing to outpace average GDP growth. Total factor productivity, or TFP, has also grown much more slowly than GDP, suggesting that capital is not being used efficiently enough.

Lợi also highlighted the economy’s heavy reliance on the foreign direct investment sector. Foreign-invested companies make a substantial contribution to exports and domestic GDP, but their links with local businesses remain weak.

“Only about 13 per cent of FDI companies have established links with domestic enterprises, while just 2.3 per cent conduct research and development activities,” he said.

The domestic private sector, despite being designated as an important engine of growth, has yet to develop the capacity needed to fulfil that role, he said.

Micro-enterprises account for as much as 85 per cent of private businesses and small firms for another 10 per cent, while medium-sized and large companies make up only about 5 per cent.

Many private companies remain poorly connected, technologically weak and operationally inefficient, while average employee incomes in the sector remain low.

Lợi also raised concerns about the limited inclusiveness of Việt Nam’s development. Inequality in access to essential resources remains high, with the Gini coefficient standing at 0.62 for land access and 0.8 for access to capital.

Income gaps also persist among regions, population groups and different parts of the economy, particularly between the private sector and other sectors.

At the same time, the positive impact of economic growth on social progress appears to be weakening. The responsiveness of poverty reduction, human development and average household spending to GDP growth has declined.

Investment in key foundations for long-term development also remains well below international benchmarks. Spending on R&D amounts to only about 0.43 per cent of GDP, compared with a benchmark of 1 per cent. Education spending stands at 2.2 per cent of GDP against a benchmark of 4.6 per cent, while healthcare spending is 1.89 per cent, compared with a benchmark range of 3-5 per cent.

Productivity and domestic value

Prof Dr Nguyễn Trọng Hoài, a senior lecturer at the University of Economics HCM City, agreed that the current model was reaching its limits, particularly as gains from structural transformation became harder to sustain.

“Data show that Việt Nam’s TFP growth remains low compared with that of developing countries and emerging economies,” he said. “Growth in information technology capital and improvements in labour quality also remain limited.”

To catch up with emerging economies, Việt Nam would need to increase the rate of improvement in labour quality fourfold and expand investment in information technology capital fivefold, he said.

Compared with the Republic of Korea’s development path, Việt Nam would need to achieve average annual TFP growth of at least 2 per cent.

The country also has less room to raise productivity simply by moving workers from one part of the economy to another.

“The movement of labour from agriculture to manufacturing and from rural to urban areas no longer generates the strong growth momentum it once did,” Hoài said.

“This means Việt Nam must shift towards a development model that relies much more heavily on workforce quality, technology and innovation.”

Although Việt Nam’s exports have grown rapidly over the past two decades, the share of value created within the country remains low.

Between 2010 and 2023, value added in tradable sectors grew by about 5.4 per cent annually, below the 6.6 per cent recorded in non-tradable sectors. Employment in tradable sectors declined by 1.4 per cent a year, while employment in non-tradable sectors increased by 2.6 per cent.

Weak links between foreign-invested and domestic companies remain another major bottleneck.

Exports of high-technology products classed as “emerging champions” have expanded quickly, but most of that growth has occurred within the FDI sector. Meanwhile, the ratio of domestic value added to total exports by Vietnamese companies has declined.

According to Hoài, this shows that technology transfer and spillover effects from FDI have not matched the sector’s scale or contribution to exports.

Two possible paths to high-income status

Lợi said the new model envisaged under Resolution 19, with targets for 2030 and a vision to 2045, should comprise two broad groups of components.

The first would define the desired outcomes of development, including cultural and human development, environmental and ecological protection, deeper international integration, a modern society and stronger national defence and security.

The second would provide the conditions needed to achieve those outcomes, including an efficient, autonomous and internationally integrated economy and a modern, effective and efficient system of national governance.

Hoài presented two possible development scenarios for Việt Nam.

Under the first, the country would retain its current growth model and struggle to reach high-income status. Under the second, strong reforms, effective implementation of major resolutions and focused action on key bottlenecks could enable Việt Nam to become a high-income country around 2045-47.

“In the reform scenario, average annual TFP growth would have to rise from about 0.2 per cent to 2 per cent,” Hoài said.

“Reform efforts should focus on investment in technology and innovation, the development of a highly skilled workforce and the capacity of domestic enterprises. A new generation of FDI must be tied to technology transfer and create opportunities for Vietnamese small and medium-sized enterprises to participate more deeply in global value chains.”

At the heart of the policy shift, he said, should be a move from the “1i” model, based almost entirely on investment, to a “3i” model comprising investment, infusion and innovation.

Under this approach, capital investment would be accompanied by the wider diffusion of technology and the capacity to create new products, processes and business models.

The three principal tasks would be to strengthen domestic enterprises, improve technology spillovers from foreign-invested companies and help Vietnamese businesses move into higher-value segments of global value chains.

Hoài also pointed to the considerable potential for expanding services exports. Services currently account for only 9.5 per cent of Việt Nam’s exports, well below the ASEAN average of 26 per cent and the OECD rate of 39.2 per cent.

He said the pursuit of higher growth and high-income status must also remain balanced and inclusive.

Việt Nam should create conditions for workers to return to rural areas to live and work through “reverse migration” models, while developing the silver economy as the country becomes an aged society from 2036.

“The aspiration to become a high-income country must be pursued alongside macroeconomic stability, stronger productivity and opportunities for every region and population group to participate in and benefit from development,” Hoài said.

Economic and social policies must move together

Prof Dr Giang Thanh Long, a senior lecturer at the National Economics University, stressed that Việt Nam could not redesign its economic model without simultaneously addressing its social challenges.

He said Việt Nam had made substantial social progress during the past 40 years. From being one of the world’s poorest countries in the 1980s and 1990s, it had become a middle-income economy and was moving towards upper-middle-income status under World Bank classifications.

On several social indicators, Việt Nam now performs as well as, or even better than, some Southeast Asian countries with similar income levels, including Thailand and Malaysia.

However, Long said the next 20 years would bring major demographic, technological and environmental changes that must be incorporated into the country’s growth and development plans.

“As Việt Nam changes its growth model to pursue social objectives, inclusive growth and inclusive development, it must take account of the defining trends of the 21st century,” he said.

The first is rapid population ageing. Việt Nam’s population is ageing at a particularly fast pace relative to its income level, raising the risk that it could become old before becoming rich.

“If ageing advances too quickly in relation to economic development, Việt Nam will have limited resources with which to prepare for an aged society,” Long said.

Migration is another significant issue. Urbanisation and migration are closely connected and are reshaping the demographic structure of both rural and urban areas.

Meanwhile, the middle class has expanded rapidly and is expected to continue growing. This could become an important driver of economic growth, but changing consumption and production patterns would also create new policy challenges.

Digitalisation and digital transformation are likewise changing Vietnamese society. While they can create new development opportunities, they could also widen disparities and leave substantial gaps between population groups.

Climate change must also be factored into all long-term economic forecasts and development plans, Long said, noting that Việt Nam is among the 10 countries most severely affected by global climate change.

Turning the demographic ‘gold mine’ into a silver economy

Long said Việt Nam was passing through an unusual demographic period in which it was benefiting from a golden population period while also experiencing rapid ageing.

The golden population period is expected to peak in 2039 and then gradually subside. At around the same time, Việt Nam is projected to become an aged society, with people aged 65 and over accounting for 14 per cent of the population.

Ageing is accelerating because the total fertility rate has fallen sharply while average life expectancy has continued to improve.

Although the silver economy is increasingly discussed as a future source of growth, Long cautioned that it would not emerge automatically.

“The silver economy is not a ready-made economy waiting for us in the future,” he said. “To build it, Việt Nam must begin making effective use of its demographic ‘gold mine’ today.”

The labour force is already facing low skill levels, a low-value-added trap and a very high rate of informal employment. Protection for older workers remains inadequate, while gaps persist in the social security system.

Long said a successful transition to a new development model would require economic reform, social welfare and healthcare policies to advance together.

“Việt Nam cannot separate economic development from social issues,” he said.

“Without a balanced approach to economic development, social security and healthcare, population ageing, migration, inequality, digital divides and climate change will become major obstacles to the country’s sustainable development.” VNS