New reports point to innovation as key to Vietnam’s progress

Exploiting the power of innovation

The “Science, technology and innovation (STI) in Vietnam” report is a product of the WB's Advisory and Analysis Support Program on improving Vietnam's innovation capacity. The report was developed at the request of the MoST and funded by the Phase II Strategic Partnership Program between the Australian government and the World Bank Group (ABP2).

Specifically, the report studies the current policy on STI; analyzes the bottlenecks that hinder businesses from innovating and proposes a comprehensive reform agenda to drive innovation-based growth. This information is of great significance as input information to formulate the Science, Technology and Innovation Strategy for the 2021-2030 period and the 10-year Socio-Economic Development Strategy for 2021-2030.

Minister of Science and Technology Huynh Thanh Dat speaks at the announcement ceremony

Based on analysis and assessments, the report recommended that Vietnam rebalance its STI development policy, shifting from focusing on investment in creating advanced technology to promoting technology absorption and diffusion among groups of enterprises. The report’s authors proposed focusing on technological spillover, not just research and development (R&D), as tools for significant productivity and economic transformation and suggested policy interventions and government support in this regard.

The report also argued that the deeper adoption of innovation could help countries overcome new challenges and continue to thrive, including factors of global geopolitical conflict, the Covid-19 pandemic, climate change and a dramatic decline in productivity growth. However, spurring innovation requires a comprehensive reform agenda.

The impact of technology absorption is also clearly quantified in the report “Technological innovation in Vietnam: Assessing the impact of technology on economic growth” jointly implemented by CSIRO, the Australian National Science Agency and units under the MoST of Vietnam.

Sponsored by the Aus4Innovation Program, the report provides tools to assess the current status and impact of technological progress and innovation on Vietnam's economic growth. The research results show that technology contributed more than 50 percent to Vietnam's overall economic growth in the 2016-2019 period.

The report is an important policy reference in Vietnam's economic transition to 2030, with a vision to 2045, and shows that innovative factor plays an increasingly important role in economic growth compared to capital and cheap labor.

New economic growth drivers

Carolyn Turk, World Bank Country Director for Vietnam said Vietnam will need new drivers of economic growth in order to achieve its ambition of becoming a high-income economy by 2045. Innovation will be the fundamental foundation in raising incomes and improving the quality of growth, she said. However, there are different approaches to fostering innovation and this report offers ideas that may be relevant for Vietnam, Turk explained.

Investment is needed to create motivation for businesses to innovate technology

Robyn Mudie, Australian Ambassador to Vietnam, said his country had been “supporting Vietnam to make evidence-based policy decisions in the fields of STI, and this report is another milestone in our partnership.”

A team of researchers from Australia and Vietnam worked on this report for a year and a half, collecting and analyzing data from a period of nearly 20 years to develop two modern economic models to quantify the contribution of technological progress to economic growth. “We hope that the MoST can apply these two models in planning long-term national policies on STI,” said Ambassador Robyn Mudie.

According to Minister of Science and Technology Huynh Thanh Dat, the reports clearly show the important role of STI for Vietnam’s socio-economic growth and progress, constantly improving and enhancing the capacity of the innovation ecosystem.