Vietnam Challenges in Development

“What are the major obstacles in your country’s development to achieve long-term and sustainable growth and in addressing such obstacles what public policies need to be put in place, particularly in relation to national technology and innovation capability? ” Vietnam’s reform process named Doi Moi (Renovation) since 1986 witnessed success of market-oriented changes. Not only has Vietnam been one of the world’s fastest growing economies (averaging over 7 per cent p. a. GDP growth), it has made great strides towards eliminating poverty, achieved national food security and become a major exporter of agricultural commodities.

However, the process of shifting from agricultural dominance to industrial dominance has also created number of negatives effects for the country that public policies should be put in place to address. Three main obstacles, which Vietnam has to face up with, are those issues of growth, society and environment: Firstly, the country’s economic growth primarily is factor-based and quantity-based while knowledge-based development accounts for minimal proportion. The growth made by input capitals (foreign investment, natural resources) makes the results do not deserve with investment.

IMF experts make a comparison of Vietnam case with Thailand and Philippine in the past 2 decades, when two country experienced same position as Vietnam currently, 30-40% total revenue of the nation created 12% growth rate, while Vietnam’s investment up to 60% of total revenue but growth rate is only 6-7%/year. It’s the time to pay attention on economic effectiveness rather than just targets setting. Secondly, economic growth in short time has lead to series of social issues.

Inequality and the gap between rich and poor, rural and urban, plains and mountainous areas has been widened not only in terms of income but also living standards and chances. The rapid growth of urban economy and industry has not been linked harmoniously with rural economy and society. While many new jobs continue to withdraw young labors from the rural, they also worsen the unbalance of rural family life, gender and age. More jobs are created but unsecured, life in industrial zone or city suburban with rental house, low-income and manual job can not secure a future.

The rest of people stay with agriculture, however, the growth of and is being contracted, constraining the application of hi-technologies; farming syste agricultural production (so far mainly relying on in labor and natural resources – intensive investment) has no longer enjoyed favorable conditions. Agricultural land is scattered m is still based on habitant and qualitative; products are low competitiveness. Thirdly, environment is damaged seriously. Pollution is increasing, urban and industry waste is poured to the rural. Some natural resources are over exploited for exports purpose without planning.

Fossil fuel is the main source for the economy, technology to create alternative energy is slowly applied. In addition, the happening of epidemic, climate changes is becoming complex. Long term policy to adapt with climate change is still in the beginning stage of formulation while the country have to struggle with day to day disasters. In order to addressing those obstacles, new strategic orientation should be identified; main approaches of public policy in the new period are as follows: Distribute equally the growth results.

Remove all barriers and create favorable conditions for the development of resource markets in the rural (labor, land, capital and science and technology) so that the market mechanism and internal capacity of rural people can be mobilized to regulate effectively all available resources; mobilize abundant rural labor resource, urban savings, and international capital to upgrade rural infrastructure and develop rural services and crafts (including industry and non-agriculture activities in the rural); move the urban and industry to rural areas, export and take rural labors to the urban.

Focus investment on education to improve the human resource capability through appropriate vocational training policy; develop health care system in the rural, especially in difficult and poor areas; stimulate economic sectors to provide services in the urban and favorable areas; gradually, narrow the gaps of service quality between the rural and the urban. Stimulate all economic sectors to participate in the development and application of science and technology to create higher quality products.

The State should concentrate its investment in science and technology applied for public services in agriculture, extension, in difficult and poor areas Identify clearly necessary criteria and areas for economic-environment balance; ensure the sustainable social and environmental development; actively make harmoniously economic, social and environmental planning

In conclusion, entering new development phase, Vietnam’s development course requires new policy solutions to change investment direction into knowledge-base, mobilize hidden resources, create motivation for a large number of people to achieve a long-term and sustainable growth in which national technology and innovation capability enhancement play an crucial role.