Establishing a new development model for high growth

Vietnam is facing opportunities for transformation when the draft Political Report of the 14th National Congress sets the goal of "striving to achieve an average gross domestic product (GDP) growth rate of 10% or more per year in the 2026 - 2030 period". This is considered the key for Vietnam to open the door to the group of developed countries.

But this door cannot be opened to the old powers, which rely heavily on capital and cheap labor. In other words, if we continue to maintain the old development model, it will not only be difficult to achieve the growth target, but also risk getting stuck in the middle-income trap, especially in the context of many risks from global economic instability.

Trade policies, reciprocal taxes, anti-dumping, anti-subsidy of many countries... and other uncertain risks are gradually reshaping the global economic game. Therefore, the advantages of participating in 19 free trade agreements also come with many challenges, forcing Vietnam to change the way it organizes production and business in the coming time.

Mr. Shantanu Chakraborty - Country Director of the Asian Development Bank in Vietnam recommended: "In the trend of self-sufficiency in the supply chain of countries around the world , Vietnam cannot just be a processing link anymore, not too dependent on exports of FDI enterprises, but needs to transform its internal strength to cope with strategic barriers."

The effective answer at this time is to innovate the growth model, focusing on three golden keys: strong enough investment, productive enough labor, and especially high enough total factor productivity (TFP).

In An Giang, farmers are changing the way they cultivate and produce... through digitalization down to every square meter of land, detailing the amount of seeds and fertilizers for each growth stage. Farmers no longer have to wade through mud in the hot sun, but instead use drones with digital mapping applications, artificial intelligence...

Digital technology and artificial intelligence not only help increase labor productivity, but also reduce costs by more than 20% and bring in an increase in income from 12 to 50%. But why is this method currently just a bright spot, why is the rate of businesses actually applying core technologies and artificial intelligence still low? The reason is because access to capital or preferential policies for research and development (R&D) still has many obstacles.

Mr. Nguyen Duc Kien - Former Head of the Prime Minister's Economic Advisory Group commented: "Infrastructure capital can be mobilized from other sources with appropriate mechanisms, and a part of state capital can be invested in, for example, establishing venture capital funds to nurture new technologies and new fields."

"40% or more than 40% of investment spending in this field will create a breakthrough in development, including soft and hard infrastructure of the country," said Mr. Le Hoang Anh - Economic and Financial Committee of the National Assembly.

The two keys - strong enough investment, productive enough labor - are gradually being solved, but how to use each dollar of capital more effectively, without increasing labor but still contributing to GDP growth. That is the third key - total factor productivity or TFP.

If the current TFP rate is maintained, the GDP growth target in the coming time may decrease by 2.5-3%, so it is necessary to remove barriers so that total factor productivity must reach an increase of 5.6% mainly thanks to science, technology and innovation.

Source: https://vtv.vn/xac-lap-mo-hinh-phat-trien-moi-de-tang-truong-cao-100251031102847629.htm