'Vietnam's investment in research and development is very low'

UNDP economic experts recommend that Vietnam is investing very little in research, development, and innovation and needs to improve to avoid falling into the middle-income trap.

Discussing the second session on labor productivity at the 2023 Economic - Social Forum on September 19, International Economist Jonathan Pincus, United Nations Development Program (UNDP) in Vietnam, said that increasing labor productivity needs to be viewed in the long term rather than in the short term.

Citing the stories of Thailand and Malaysia in the late 20th century, Mr. Pincus said both achieved impressive productivity growth rates of 5.6-16.3% per year between 1989 and 1999. However, the pace slowed significantly after the Asian financial crisis.

"It is very difficult for a country to have rapid productivity growth over a long period, that is the middle productivity trap," Mr. Pincus concluded, calling this a major threat.

What has kept these countries trapped in the middle-productivity trap is their failure to upgrade their development strategies and their slow use of national innovation systems. They have mainly pursued productivity growth strategies through low-value exports and have failed to apply innovation to bring about fundamental changes in their industries.

Mr. Pincus said that Vietnam is a low-middle income country that has achieved labor productivity growth for a long time. He is concerned that Vietnam may fall into the middle labor productivity trap like Malaysia and Thailand did. "Can Vietnam effectively apply the national innovation system to change its development strategy after achieving middle labor productivity level?" the expert asked.

International economist Jonathan Pincus discusses at the morning session on September 19. Photo: National Assembly Media — International economist Jonathan Pincus discusses at the morning session on September 19. Photo: *National Assembly Media*

According to this expert, the cost of research and development (R&D) in Vietnam is quite low, only 1/3 compared to China and half of Thailand and Malaysia, which is a worrying thing. While R&D cost is one of the important measures, assessing the ability to increase productivity through technological innovation.

UNDP experts pointed out two problems in Vietnam's investment in research and development: spending too little and spending too widely. Currently, Vietnam's investment in innovation and research and development is the lowest in the public sector, and private research institutes are not encouraged to develop. This is because private export enterprises are mainly FDI enterprises and multinational enterprises, while domestic enterprises are mainly small and medium-sized, and it is difficult to have enough resources for research and development.

Mr. Pincus recommended that the Vietnamese Government should really create big pushes in applying national innovation, investing heavily in R&D as well as developing high-quality human resources for the long term. Besides, Vietnam is currently one of the leading countries in the world in the number of international students in the US and Europe. Mr. Pincus said that this is a source of highly qualified, technologically skilled labor and promises to be leading scientists . "They need to be attracted back to domestic research institutes and universities to really contribute to development," he suggested.

Mr. Felix Weidencaff, Employment Specialist, International Labor Organization (ILO) Regional Office for Asia and the Pacific, acknowledged that Vietnam has achieved unprecedented economic growth in the past decade, but compared to ASEAN countries, there is still a gap, lower than some countries in the region.

According to Mr. Felix Weidencaff, Vietnam needs to develop human resources suitable for the market and the knowledge-based, technological, and Industry 4.0 economy; establish an effective labor market information system; and increase productivity for small and medium-sized enterprises.

The Vietnam Socio-Economic Forum 2023 with the theme "Enhancing endogenous capacity, creating momentum for growth and sustainable development". The forum includes two thematic discussion sessions including "Enhancing internal strength, unleashing resources, supporting businesses to overcome difficulties"; "Improving labor productivity and ensuring social security in the new context" and a plenary session. This is an event jointly organized by the National Assembly's Economic Committee, the Central Economic Committee, the Ho Chi Minh National Academy of Politics and the Vietnam Academy of Social Sciences.

Son Ha

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