World Bank offers “moon cake” recipe for boosting Vietnam’s growth

06:00 | 11/10/2020 Cooperation

(VEN) - There is notable room for further improvements in global value chain (GVC) development to meet Vietnam’s ambitious long-term goal of becoming a high-income country by 2045 and narrow the development gaps with advanced economies. This assessment was delivered recently by Victoria Kwakwa, Vice President for East Asia and the Pacific at the World Bank, to the third Vietnam Reform and Development Forum (VDRF 2020) themed “Vietnam: Actions to Recover Growth towards Inclusiveness and Sustainability”.

world bank offers moon cake recipe for boosting vietnams growth

“As we approach the traditional mid-autumn festival, I would like to offer a special moon cake recipe for Vietnam’s success for the next decade. The recipe includes a vibrant and innovative private sector with strong linkage to foreign direct investment (FDI), effective institutions and quality education. And we hope that every Vietnamese gets a fair share of this cake,” Kwakwa said with a smile.

Vietnam has become one of the world’s five leading countries in terms of FDI growth. Although it has been successful in integration into global light manufacturing value chains, promoting growth and increasing employment, according to Kwakwa, Vietnam’s participation in global and regional value chains remains limited, despite being “one of the most open economies in the world”. To accelerate productivity and growth, according to economists, Vietnam needs to increase participation in the supply chain, she added.

Forum participants said Vietnam has many opportunities for a strong economic post-pandemic recovery and deeper participation in global value chains.

The World Bank estimates that a one percent increase in GVC participation boosts per capita income levels by more than one percent - about twice as much as conventional trade, making stronger GVC participation an important driver for accelerating Vietnam’s productivity and growth.

To prepare for strong recovery and make the most of emerging opportunities, Vietnam should continue to contain the coronavirus and consolidate activities that can accelerate a strong recovery, Kwakwa said. She also advised Vietnam to continue easing entry and operational restrictions on FDI.

Vietnam should also accelerate skills development and research and development (R&D) capacity building, as well as effective implementation of institutional reform. Kwakwa noted that Vietnam should prepare for the future shift in GVCs and mitigate potential adverse impact of accelerated adoption of technology on labor markets.

Dr. Jacques Morisset, World Bank Lead Economist and Program Leader for Vietnam said joining global value chains should be a strategy to create jobs for the rapidly growing workforce. However, Vietnam is facing challenges since technological breakthroughs have been minimizing the need for low-skilled workers in the manufacturing industry requiring it to promote post-high-school education and training to improve its workforce capacity, he said.

The Vietnam Reform and Development Forum is the biggest policy dialogue of the year between the Government of Vietnam and development partners. This year’s forum was sponsored by the Australian government through the ongoing Australia-World Bank Group Strategic Partnership - Phase 2 (ABP2).

Tue Minh