Development model based on knowledge, technology and innovation - The inevitable path!

The draft document of the 14th National Party Congress sets out a landmark orientation: Repositioning Vietnam's development model, shifting from a model based on investment capital and cheap labor to a model based on knowledge, technology and innovation.

This is the inevitable path if Vietnam wants to escape the "middle-income trap" and join the group of high-income developed countries by 2045.

To make this shift, a new institutional mindset is needed, in which the State plays the role of "midwife" of knowledge - technology - creativity, while enterprises become the nucleus of value creation in the knowledge economy .

Mr. Mac Quoc Anh, Vice President of Hanoi Association of Small and Medium Enterprises.

Limitations of the old growth model

Over the past three decades, Vietnam’s growth model has relied mainly on three traditional drivers: public investment, FDI capital and cheap labor. Thanks to that, Vietnam has achieved an average GDP growth rate of 6-7%/year, becoming one of the most dynamic economies in Asia.

However, the efficiency of investment capital is decreasing: The ICOR coefficient (investment capital/increased GDP) increased from 3.5 in the 2001-2010 period to more than 6 in the 2020-2024 period, meaning that it takes 6 dong of capital to create 1 dong of increased GDP.

Meanwhile, the advantage of cheap labor is declining due to rising labor costs, the golden population structure is gradually ending and regional competition is increasingly fierce. Without renewing the development model, Vietnam will face the risk of "double lag" in both productivity and being stuck in the low-tech trap.

Repositioning the new development model

To enter a new stage of development, Vietnam needs to make innovation the central driving force of growth. Innovation is not just about technology, but also about the combination of knowledge, governance, institutions and creative culture. This requires three fundamental transformations as follows:

Shift from “material investment” to “knowledge investment” - prioritizing budget for education , research, startups, and technology transfer.

Transforming from “physical labor” to “intellectual labor” - developing human resources with digital skills, critical thinking and creativity.

Shifting from “copycat model” to “indigenous innovation model” - creating “Make in Vietnam” brands, technologies and solutions.

In this, private enterprises must be considered the "center of the creative ecosystem", and the State is the one who creates the environment - infrastructure - institutions for creativity to flourish.

The State's role in creating

The State cannot replace businesses in innovation, but it can create conditions for innovation to explode. Specifically, it needs to focus on three “policy levers”.

First , build a synchronous national data infrastructure - consider data as a "strategic public asset" similar to land, electricity or energy.

Second , form an innovative government, apply sandbox, create testing space for new technologies (AI, blockchain, digital biology, green materials).

Third , promote finance for innovation, including venture capital funds, public-private research funds and tax incentives for businesses participating in the research and development (R&D) chain.

The State not only "steers", but also "lights the fire", helping to clear the flow of knowledge between subjects: Scientists - businesses - people.

Enterprise is the center

International experience shows that innovation is only truly sustainable when businesses play a central role. Korea has chaebol, Japan has keiretsu, America has Silicon Valley, Vietnam needs a Vietnamese creative business ecosystem.

Small and medium-sized enterprises, which account for more than 97% of total Vietnamese enterprises, need stronger support to improve their technological capacity, governance and digital integration.

Specifically, it is necessary to establish a network of regional innovation support centers, connecting businesses with research institutes and investment funds; develop the "SME TechBridge Center" - a technology bridge between domestic and FDI enterprises; encourage the formation of industry innovation alliances in key areas such as new materials industry, clean energy, smart logistics, and digital healthcare.

When enterprises are the core of innovation, the State accompanies, and society is the resource, Vietnam will form a true "knowledge-based economy".

Creativity associated with Vietnamese culture and values

Innovation is not only about technology, but also about Vietnamese culture, spirit and identity. A nation with a tradition of studiousness, creativity and resilience like Vietnam has a full foundation to build a knowledge-based economy with Vietnamese identity - humane, sustainable, leaving no one behind.

Therefore, creative development needs to be associated with: Liberal education and professional ethics, so that knowledge goes hand in hand with personality; corporate culture and innovation culture, considering failure as part of learning; policies to encourage overseas Vietnamese talent and connect global intellectuals to create a “global Vietnamese brainpower network”. Only when creativity becomes a cultural value, will it become an everlasting internal resource of the nation.

Vision to 2045, Vietnam becomes a nation of knowledge, technology and creativity. If the period 1986-2025 is the journey of “Innovation and Industrialization”, then the period 2026-2045 is “The period of knowledge creation and creativity in Vietnam”. The goal is not only growth, but also high-quality development, where knowledge, data and creative culture become national capital.

That vision requires an intelligent government - creative enterprises - learning society, joining forces to create "green, digital and humane prosperity". At that time, Vietnam will enter the group of countries developed by Vietnamese intelligence, in line with the spirit that the draft documents of the 14th National Congress have laid the foundation.

Dr. Mac Quoc Anh
Vice President of Hanoi Association of Small and Medium Enterprises

Source: https://hanoimoi.vn/mo-hinh-phat-trien-dua-tren-tri-thuc-cong-nghe-va-sang-tao-con-duong-tat-yeu-722869.html